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
Trend is friend
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