Nifty surprisingly opened on a strong note and there after moved strongly for the next two days and on the last two day of the week. The important point to be noted is that nifty once again closed above 5400 which clearly shows the strength of the bulls. Nifty has to maintain above 5400 to indicate further strength of the bulls. Any move and close below 5400 and especially below 5350 on weekly basis would indicate weakness and has chances of taking nifty towards 5200-5000 levels at-least. So the coming weeks would indicate the strength or weakness of the bulls. It appears that when ever it is trying to move up selling pressure is coming to the market. It appears from the movement of the nifty that the bulls are able to maintain the market but they are unable to take it up as when ever they are taking slightly up they are facing a heavy selling from the bears. So it appears that any movement and close above 5500 has all chances of taking the market to the final blow off rally. If nifty successfully conquers 5500 then we have all fair chances of a blow off rally which would make markets move very fast to dizzy heights and might again prove to a big grave for the market. What ever may be the case the market is still in a bull mode and it would try to move further or at-least maintain these levels. As indicated above any breach of 5350 would indicated reversal on daily basis as it would form a lower low of the current rise from 4750 levels. So 5350 is the crucial level to be watched by the market participants.
One of the worrying features of the current rise is that, Reliance Industries is slowly drifting down and market is not noticing the same. RIL has broken the triangle formation for the last one year and is moving down slowly and is at 1000 levels, the volumes were also heavy on the break out. So till RIL moves up above 1050 the trend will be down. It may be noted that when ever RIL dose not move up along with the general market it is worrying factor. It has also lost the market participants observations and slowly drifting down and no one is caring above it, even though it is one of the most worrying factor. It has been observed that when ever RIL dose not participate in the rally and the market moves up and RIL moved down then it is a worry some factor as in all the times market has finally followed RIL eventually and in each of these cases it was the case of market top which was not easily breached. The target for RIL on break of the triangle comes to around 750-800 levels. Which is nearly 20% from current levels? If RIL tries to move to these levels then bulls have to surely worry on this front.
By the completion of the current weak nifty has been rising continuously for 11 weeks. And it has been observed that during the last one year nifty has been raising any where between 9-11 weeks and on the completion of 11 weeks constitutes a major event as it might indicate reversal for the short term as per time series analysis and whether it would materialize or nifty would continue to rise for another two weeks to complete 13 weeks which is the next immediate Fibonacci we have to wait and see. If time series is to be followed then we have chances of seeing market drifting down slowly
.
It may be noted that nifty is now placed at very important levels technically. It is now poised at very crucial support levels, on the down side the support levels are for last one year trend line which is the blue line and the white line and the dotted yellow line is the trend line drawn from the lows of march 2009. All these are between 5430 and 5400. So technically nifty might struggle to break below the 5400 levels and if it breaks successfully then hell would break loose on the market as it has all the possible chances of a vertical fall at-least towards 4950 levels. So 5400 appears to be a huge technical level for the nifty in the coming days or weak. Any longs can be held till that point only and no more than that.
Positives for Nifty:
§ Market is above 200 day EMA.
§ Market is above 50 day or 100 day EMA.
§ DMI has moved above 20 indicating strength of bulls.
§ Weekly MACD is in a buy mode.
Negatives for nifty:
§ The rise is on –ve divergences with MACD histogram and also RSI.
§ Daily MACD has given a sell signal
§ +D1 is moving down sharply and –D is moving up sharply indicating that bears are started to have upper hand.
Elliott wave:
In Feb-March I have indicated in my Elliott study that it would be difficult nifty to move above 5415 and 5585 and now one is violated and we have see whether the second one would be violated. This time it has failed to achieve the same.
Directional Momentum index – (DMI)
Currently +D1 is above –D1 and +D1 and +D1 has started to move down sharply and –D1 is moving up indicating the bears are gaining upper hand swiftly even the DMI has maintained at same level indicating neutral for the market.
M.Sri Mahidar
Sunday 8thAugust 2010, Time 19.16 IST
Trend is friend
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