Nifty

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Weekly technical Analysis for week ended 27th November 2010.
Market has opened on Monday on a positive note moved near the high of last Friday and there after the next four days it has fallen vertically indicating that bears have taken control over the market for the first time. Market has closed in red for three consecutive weeks. This is the second time in this up move from March 2009 that it has closed in negative territory for three consiquetive weeks. Maximum periods of consiquetive weekly closes is four weeks in the entire run. We have to see whether this would be arrested after three weeks or would continue for another week. One of the noticing features of the movement of the nifty during this week is that it has also closed below 100 day EMA. The last week it has closed below 50 day EMA and this week it has closed below 100 day EMA which clearly indicates that bears are slowly coming into the market and has chances of taking the market further down. The closing of nifty below 5900 for two consecutive weeks is not good for bulls and nifty and bears would have been laughing at the same time as they has got an opportunity after a long time. One of the important points for bulls is the market should recover from current levels and move very swiftly towards the high of 6300 other wise its all over for bulls and we can expect a prolonged down move in the market which can last for atleast 6 months so nearly the first half of the next year should be good news for bears and bad news for bulls. So if the market does not move above 6300 in the up move which is expected to materialize in the coming weeks the we can be sure that we are in for a bad market for the bulls. One point to be noted that there have been very very heavy volumes on Friday fall which is just giving an indication that atleast we have made a temporary (short term) support for the market

One of the worrying feature of the market is that the charts of the individual stocks have damaged more that that of the index which is clearly indicating that the broader market is bearing the brunt of the bear onslaught and it is yet to be indicated by the indices. When the stocks appear to be more weak than the indices then we have all fair chances of market moving in the direction pointed by stocks. One worrying feature also is that we are seeing continues increase of stocks making a new 52 weeks lows indicating that the bears are becoming active.

I have been indicating for the last so many months that we would be completing 21 months in the month of November and we can expect to see market moving down there after i.e. in December or January and it appears that we might have started the down move from 21st month only. If we see the exact date of low for nifty in March 2009 it is 6th march 2009 so we must be completing 21 months on 6th December 2010 and we are just near that. If the market does not recover from here the we are in for a rude shock for bulls. In January 2008 also market has started to correct from 21st months onwards will this happen this time also.

Historically seeing market have never topped in November. Historically November has been bad month for bulls and in December markets recover and try to make a new high or go near it and then they collapse like nine pins from January onwards. Historically January of the years have been marked with start of the bear market and when ever it has happened then the bear markets lasted for long atleast for 6 months. So whether the markets move up now in December and there after start down move from January onwards or continue to move down we have to wait and see. Markets generally surprise every body so this time also they might have surprised every body by starting to move down from November.

If you apply Fibonacci time periods to bulls and bear market. The bear market lasted for around 13 months and current bull market lasted for around 21 months which happens to be exactly 161.8% if the time taken to fall so have we formed double top now? Only time would tell. If you are following the analysts in the market or following on television (which I donot like) non of the analyst has indicted the phenomenon of double top (refer chart below) every body was busy in projection of the market further upward and have collectively ignored the concept of double top and till now they have not calling it a top. This is one of the strong indications that the market might have topped out as when every body ignores major technical formation that is generally the top. If you see the other technical parameters line RSI and MACD etc., there was a major –ve divergence in daily charts ( refer chart 2 below) which has also been ignored by the market analysts. Generally analysts are carried away by one side of the market that they ignore any warning signs and this time also it seems they have ignored that signal. Even in the January top they have ignored the warning and also the negative divergences and we know that what has happened.

Positives for Nifty:

§ Market is above 200 day EMA.
Negatives for nifty:
§ Market is below 15 day and 50 day EMA.
§ Market is below 100 day EMA
§ Daily and weekly MACD is in sell mode.
§ Weekly RSI has started to move down from over sold levels and now at 52 any move below 50 would not be good for the market.
§ Daily stochastic is in oversold positing indicating that prices are closing at the lower end of the trading range. Any up move of the Stochastic oscillators has chances of taking the market up.
§ Weekly stochastic is in sell mode.
§ -D1 is moving up and +D1 is moving down and at very low levels. and DMI has again moved above 20 indicating the down move might have set in.

Elliott wave analysis: There is not much change in the elliotte wave analysis the targets of 6425, 6811 and 7094 still hold good and we have to see whether the same would be achieved or not. I have some hope on achieving 6427 but doubt on remaining two. If we make a new high we have chances of seeing 6811 or near it with +/-100 points.

M.Sri Mahidar
Sunday 29th November 2010, Time 19.25 IST
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NIfty Update

Nifty has been falling relentlesly for last two weeks and during the same period it has broken below so many curcial support levels, which is pointing that the market might have topped out at around 6335 levels. if its so, them the market might have formed a double top which would thus indicate a healthy correction which migh be more severe than what has been seen in last two years. We have been seeing scams one after another and now a new one in banking sector. it appers that all these might take the market to a different trejectory on the down side. if the anticipated correction has set in we might see severe erosion in the stock prices in the months to come. so it appears that it is better for the bulls to tighten their belts i.e stop losses should be now verified and strightly adhered to.

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Nifty Weekly update

Weekly technical Analysis for week ended 19th November 2010.
Nifty opened on a weak note and formed a green candle on 15th and there after started to fall and continued for the next three days. Of the last ten trading days there have been nine red candles and nifty has fallen by nearly 15% indicating that bears have offlate become strong and are trying to take the market down. One of the noticing features of the current move is that nifty has fully retraced the previous up move and closed below the low of the previous up wave. The previous up wave started from 5937 and ended at around 6338 on diwali day and there after the market has been moving down and has closed below that level on weekly basis which clearly indicates that bears were able to take the market below the low of the previous up wave thus signifying their superiority in the market. The weekly close below 5900 is not very good for bulls. Nifty has also made a nine weeks low and closed at the nine week low which clearly signifies the strength of the move. Now the bulls should immediately take the market up to show their strength otherwise its all over for bulls. Now the main point to be seen is whether the up move would take the market to a new high or not. If we go by the history of the current move nifty has bounced with vengeance whenever it has made such nine to 10 weeks low and every time it has succeeded in making a new high whether it would do this time also we have to wait and watch. If it doesn’t make a new high then we can safely assume that we have made a significant top which would not be broken in months to come.
One point to be noted is that nifty has closed blow the 50 day EMA for the first time in the current up move from the end of May 2010. This is a significant achievement for the bulls. When ever the weekly close was below the 50 day EMA the bulls have came back with vengeance whether this time also they would do we have to see whether the 50 day EMA offers resistance or not.

Now we would see what has happened in November months historically and what has followed after that. Historically speaking all the November months have not bee good for bulls. Generally and strangely in the second half of November the market tanks and generally it moves blow the low of the previous months and in the last weeks of November the up move noticed which goes on to make a new high in December and continued till the first week of January and then the market drops forming a major tops which is generally not broken at-least for next six months. we have to see whether the same repeats or not.

What Fibonacci is saying as I have been indicating that we would be completing the 21 months upside in November and after that we have all the chances of correcting and probably from January 2011 onwards. Whether this would be followed or not we have to see. As important Fibonacci period for the market is nearing to complete we have to be careful in our investments in the coming two months as we might see generally in such long up moves there is spill over effect where market continues for another month or two and makes a new high there by creating an euphoria in the market that its all over for bears and its only bull that’s left over. It may also be noted that the volumes during these periods would be very very high, resulting in distribution and there after the market tanks. This has been the history. If we see historically I have indicated previously that Indian markets have risen up to and maximum of 23 months only in 2006 and there after it has risen maximum for 20 months ending in January 2008. Now we have risen for 21 months which happens to be second highest in the history of the market (I am referring to nifty). So history is pointing that we might be forming a significant top in the coming month or so. Whether this would happen or not is a billion doller question. But it just warns us to be careful in taking investment decision. And mind you when ever the market has risen by 21 months or so we have corrected nearly around 70% of the entire rise till that date. This signifies that we might fall by around 2500 points (nifty) which would take the market to around 4000 levels. It appears to be unbelievable now but finally we would be seeing that target when ever the correction sets in.

One point to be noted is that till now there is no negative divergence in weekly or daily charts which is a significant achievement. But generally market develops –ve divergences in the final up move. Whether this would happen this time also, I have no doubt.

Positives for Nifty:
§ Market is above 200 day EMA.
§ Market is above 100 day EMA.
§ Weekly MACD is in a buy mode.
§ It may be noted that weekly DMI has moved above 30 for the first time in the entire up from march 2009 indicating that bulls are at the strongest point in the last one and half year. But now +D is moving down and –D is moving up indicating that gears might be shifting. But still weekly DMI is pointing upwards.

Negatives for nifty:
§ Market is below 15 day and 50 day EMA.
§ Weekly RSI has started to move down from over sold levels and now at 56 any move below 50 would not augur well for the bulls.
§ Daily stochastic is in oversold positing indicating that prices are closing at the lower end of the trading range. Any up move of the Stochastic oscillators has chances of taking the market up.
§ Weekly stochastic is in sell mode.
§ +D is moving down and –D is moving up and DMI has started to move up after flat and now at 24 this week it has moved from 22 to 24 thus indicating the bears might be gaining upper hand.

Elliott wave analysis:

There is not much change in the elliotte wave analysis the targets of 6425, 6811 and 7094 still hold good and we have to see whether the same would be achieved or not. I have some hope on achieving 6427 but doubt on remaining two. If we make a new high we have chances of seeing 6811 or near it with +/-100 points.

M.Sri Mahidar
Sunday 19th November 2010, Time 20.01 IST
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weekly Update

Weekly technical Analysis for week ended 6th November 2010.

Wising you all a Happy Deepawali

The market has been moving up continually whole through the week. One of the noticing features of this weeks move is that whole through the week that opening was gap up. The market has provided a perfect diwali dhamaka to the investors during the week. The nifty futures make an all time high while nifty failed to make a new high. It made a 52 week high of 6338 against the all time high of 6357. It appears that it would be conquered in the weeks to come. The movement of the market is suggesting that market has come into the grip of the bulls after nearly four weeks of side ways market. As of now 5937 is the crucial level to be watched till the market is above it there should be no problem for the bulls. So for any sign of weakness market ha to close below 5937 on weekly basis to confirm weakness. Till the market is above it all falls should be bought and once it moves below it the situation reverses. So bears watch out for those levels for any comfort. Markets have risen for continues 21 weeks then corrected for three to four weeks and then again have started to move up. So now we have to again calculate the weekly moves for larger Fibonacci. On larger time frame we have completed 20 months and entered 21 months this happens to be a Fibonacci and market has all the probable chances of making a correction after completion of the same. Please don’t jump into the wagon and expect correction immediately after 2 1 months are over which would be after this months market would generally continue the momentum for one or two months and then correct. And historically speaking from inception nifty has risen maximum for 23 continues months and not more that that. This is history and if that is applied then we should nor rise for another two to three months. It is only an indication and we have to wait for confirmation. And historically speaking when ever the market has risen for 21 or more months then it has corrected atleast 61.8% of the total rise of that move so in the present case if the market corrects then it would be a very very big correction measuring atleast 2400 points whether this would happen or not only the market would tell till then just follow the trend. As we have entered 21 months we might see a very heavy volatility which is generally the nature of the market at those time frames, and we might also see very very swift moves in the markets especially on the upsides and we might also see a huge divergences in the oscillators which would generally be ignored by the market players as they will be too busy with the bull market. Whether this would be feature this time also wait and watch and generally as the human nature dose not change we might also see these symptoms and if these symptoms do-not surface then we might continue to move up till those symptoms arise.

Positives for Nifty:

§ Market is above 200 day EMA.
§ Market is above 50 day or 100 day EMA.
§ Nifty is above 15 day EMA.
§ Weekly MACD is in a buy mode. And weekly MACD has also given buy signal above the trigger line indicating strength of bulls.
§ Weekly RSI is at around 80 levels indicating over bought levels.
§ + D1 as moved above -D1 indicating that bulls have gained upper hand. Weekly DMI is moving higher and has now moved above 30 presently at 31 indicating that on weekly basis the markets are gaining upper hand and any correction should be taken as an opportunity to go long in the market. It may be noted that weekly DMI has moved above 30 for the first time in the entire up from march 2009 indicating that bulls are at the strongest point in the last one and half year.
§ Daily stochastic is in buy mode and is moving up.
§ Weekly stochastic has given buy signal immediately after sell signal.
Negatives for nifty:

Only slight divergence in daily RSI.

Elliott wave analysis:
There is not much change as per elliotte wave analysis and I now post the elliotte wave update as of now according to me. The targets of the 5th wave still stand at around the levels mentioned in my weekly update in 16th October 2010. I have reproduced the same here also. The chart is updated and write up is taken from above date with slight modification where ever required indicated by red color.

The Elliot wave break down of the wave, from the start .i.e. from 4786 till now is given above. As of now all the waves are fitting in place. The wave structure might change on further movement of the market. it appear from the above that the 5th wave appears to be the longest. If the fifth is the longest it denotes that the 5th wave extended. And the fifth wave is the extended the 5th wave of the 5th should also be extended. If the 5th wave is extended then the length of the fifty wave would be at-least the total length of the 1 to 3rd wave added to the end of the 4th wave. Here on higher note the length of 1st to 3rd happens to be 667 points. So the 5th wave should be at-least 667 points from the end of the 4th wave which happens to be at 5348 so the minimum target of the fifth wave is 6015, the market has moved above it so the next target should be around 161.8% which happens to be around 6427(a new high) and the maximum length of the 5th wave cannot exceed beyond 261.8% so the maximum target should be 7094, not a one point more.

Now we proceed to study the pattern in lower structure. The wave-v started from 5348 and the break up is given in the above chart and if we assume that the 5th wave is extended then the 5th of the 5th should also be extended. Here if the 5th is extended it should be at-least of length of 1to 3rd wave. The length of 1 to 3rd wave is around 874 points so the length of the 5th wave should be of length 874 points from end of 4th wave( which is at 5937) so the minimum target should be 6811 whether we achieve the target or not only market would tell. In lower wave structure if the market moves below 5932 this would not hold good and I have to alter the wave structure which I would do when the event happens. Till then this wave structure holds good.


M.Sri Mahidar
Sunday 7th November 2010, Time 20.31 IST
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