FMCG stocks have been raising continually for so many months so we would look into the elliotte wave analysis of the FMCG index. The Elliott wave analysis of index is indicating that we might be in the final stage of the market uptrend. it can be seen from the chart that we are in the fifth wave of the trend and also at the top of the parallel line drawn. so it appears that we are in the final stage of the up move or we have completed the same. It can also be noted that the volumes are also high at the to of the fifth wave which is indicating the we might have topped or in the topping process. One this is sure we cannot expect any spectacular gains in the FMCG stocks in the coming months/years, have we are in the final stages of the up move post which we should see a healthy correction, which can atleast take the index to the lower support line. which happens to be around 10000 levels which is a fall of 30% from the current levels, I would try to work out the Elliott wave analysis of the 5th wave publish it in blog.

 

M.Sri Mahidar

Trend is Friend.

Weekly technical Analysis for week ended 15^th February 2014

Nifty during the week was in a very very tight range and on Thursday it broke the tight range and corrected heavily but on Friday again late before just close the market recovered and closed in green. Technically it appears that the up move is not convincing and it appears that it might not sustain for long and we have all chances of market falling in the coming week, whether it would start in the coming week only or in coming weeks only time would tell.

Market seems to be stuck in a narrow range, during the last two weeks, i.e during the month of february the market is stuck between two EMA, 100 day EMA and 200 day EMA. 100 day EMA is offering resistance and 200 day EMA is offering support, break of any of there resistance is a sign of trend in that direction. Currently 100 day EMA is at 6105 and 200 day EMA is at 5981, so we have a range of only 120 points, which is very very short. So market has to be closely watched at these levels. One of the positive things for bulls is that market is finding support at 200 day EMA, as bulls rule above 200 day EMA and bears below that. Any move below 200 day EMA whuld be a sign of genuine weakness and bears would pounce of bulls and bulls would have no whare to run. So Has patience and wait for the market to break below the 200 day EMA to initiate any short position till then its better to be in side lines as the market is in very tight range.

 

In the above chart, we can clearly see the market stuck between 100 day EMA and 200 Day EMA.

Elliott weve analysis:

The elliott wave analysis of the nifty is give here under, it appears that we are in the 3^rd wave of the fall. Even thoug the wave structure is not clear it appears that the 3^rd wave is splitting into its components and we are into the 3^rd of the 3^rd of the 3^rd wave. As of now the structure is not clear, but would furnish as it progresses. We have to see this structure is true or not but as of now it’s the thing which is appearing to me. It can lead to other structure , which we would come to know only when the structure unfolds. There are two optioins which are indicated in the chart below, and under the two options the market has all chances of moving down.

Wait for the market to un fold itself.

M.Sri Mahidar

Trend is Friend

February 16^th 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The trade has started to give profit. This is the strength of the Method. we have short at the end of the day at around 10370 and today the bnf after opening flat started to move down and closed virtually at the days low as per the system we have added at the low of the 10 am candle, and continued to hold the original and also add. only thing we have done today is shift of SAR(stop Loss). We are carrying our original short and also one add.

 

Another point also to be noted is that, yesterday I have indicated that bnf is forming flag and any break of 10250 would indicate the start of the down trend and has all chances of reaching around 9400 levels. Today it has moved below that level and has indicated the down trend has resumed and we have chances of moving down 10% from current levels.

 

M.Sri Mahidar

Trend is Friend.

 

Another stock which is risen nearly 6 times in last five years, Dr Reddy Laboratories Ltd, it currently trading at all time high. So obviously the question arises whether the stock can be bought at this prices, charts are giving a straight no no. We can see the chart above, over last ten years the stock has been moving in a expanding triangle pattern and it seems we are nearing one of the important technical tops in the stock. it can be seen that when ever the stock has touched the upper resistance line, it has just collapsed and corrected 100% of the rise and has fallen all the way to the support line. Currently the stock is nearing the multi year resistance line which it has never been broken successfully, so till it happens we have to assume that the stock is nearing the top especially after a phenomenal rise during last five years. Its better an avoid for the stock at this pint of time as its not going to give any spectacular returns. The technicals are indicating the performance of the stock is not going to be good in coming months or years.

 

M.Sri Mahidar

Trend is Friend.

united spirits have been in an uptrend and has given a phenomenal returns in last few years. Now we would try to look into, what Elliott wave is pointing towards. The Elliott wave is indicating that the stock has started an good up move from the year 1998 onwards and its 3rd wave has started from 2004 onwards and the 3rd wave has risen from Rs.33 to around Rs.2000 a 60x return in just four years. From 2012 onwards its has started is 5th wave and we are in the 5th wave it seems that we have completed the 5th wave of the 5th, but the parallel lines are not supporting the same, so we cannot now confirm that the stock has completed a 5 wave structure from 1998 onwards. But the short term it appears hat it has completed one 5 wave structure and we have all chances of some major turning point has occurred in the stock and at-least for some weeks or months we have chances of seeing the stock correct. So what are the probable corrective range the low of the 4th wave its either 2000 or 1700 levels. so we have all chances of seeing these levels, 1700 is a probable. If it has corrected a major wave then the stock can all the wave to the support line which is around 1000 levels. So is it healthy to buy this stock at these levels. EW is not pointing towards the same. The EW update would be seen as the picture unfolds. one this is sure if we apply the channeling technique the longer term wave structure is indicating that we have very long price targets but that would be furnished when the picture becomes clear. As of now it appears to be in down trend, so wait for it to reverse.  

 

M.Sri Mahidar

Trend is Friend.

during the last five days there was no change in the structure of the trade as the market was so narrow that even it did not hit the stop loss for last four days. Today we hit the stop loss at 10380 and we went long at that level but did not move up and at the End of the day the bnf moved below 10380 so we have to reverse to short again as it is the EOD reversal. So now again we have taken short position and carrying forward the same. The short transaction has resulted in Rs.29900 loss.

 

M.Sri Mahidar

Trend is Friend.

During the last four to five days market has been in close range, so what is the market indicating. We would now look into the Bank Nifty which has some good weightage in the market. bank nifty seems to have formed H&S pattern and has broken below the neck line which, the target for the same is coming to be around 9400 levels and now we are at 10350 levels, so we have now nearly 900 points from that level. currently bank nifty in the last one weeks seems to be forming a flag pattern. Generally Flag pattern is formed in the middle of the ensuing trend, so we seems to have completed only 50% of the fall and we have yet to move another 50%, the trend has started from around 11200 levels so this is also pointing towards another 1000 points from current levels. Till this pattern is negated the market has all the chances of moving down from current levels. any breach of 10300-10250 levels would confirm the break of flag and down trend would confirm.

 

M.Sri Mahidar

Trend is Friend.

flow trade today morning we have carried forwarded the long position. It moved above the and there after fell down hitting our SAR(Stop Loss) and we have taken reverse position and there after below the low of the WRB(Wide Range Bar) we have added one add, there after it remained in the range only. We have carried forward one short and one add. and waiting for the market to move down.

M.Sri Mahidar
Trend is Friend.

As promised yesterday the elliotte wave update for 5th wave, now it appears that we are in the 4th wave of the 5th of the 5th wave. once completion of the same we have all chances of correcting. The heavy volumes are indicating that we might be nearing the top for the stock. As of now the wave structure as per my understanding is given above, as the prices moves and forms patters, the wave structure might change. One thing is sure we are nearing top for the stock.

M.Sri Mahidar
Trend is Friend.
 

Aurobindo Pharma Limited has been darling of the investors for the last four to five months. So what does the charts say, the long term chart in furnished above it appears that its in the final stages of the up move its appears to be in the 5th wave of the third wave and post which we can see a healthy correction in the stock. One thing to be noted is that the stock has moved past the 10 year resistance line when it moved above 360 so till its above it we can expect the stock to be in strength. But the volumes during the last two to four weeks of the move have been very very heavy. this is the heaviest volumes of the entire rise which indicates that some informed investors have exited and one thing is sure that the upsides are limited for the stock. It seems that distribution is having in the stock as the volumes have been high at tops which is always bad news for bulls. but what ever may be the case till the price indicates the reversal. I would try to furnish the wave break up of the fifth wave in order to try to identify the probable top.

 

M.Sri Mahidar

Trend is Friend.

 

What is nifty pointing in this, it pointing towards the probable extension of the fall. till now what we have seen seems to be just beginning of the trend. As can be seen from the chart nifty has just taken bounce from the 200 day EMA which happens to 5975 and we should respect the same, but it appears that the bounce might not sustain as the broader market is not supporting the same especially banking stocks and now IT stocks are also slowely moving down. As can be seen from the above chart the Directional Momentum Index(DMI) has started to move up and has moved above 20 after nearly one year now its at 25 levels and moving up. the move above 20 indicates that the market has started to trend and we can expect the trend to strengthen in coming days or weeks. so prepare for the worst. in the chart the red line at the bottom is the trend line from the lows of 2003 is at around 5400 which has been offering support for the last one decade including 2008 so in the current fall 5400 is going to offer a formidable support any breach of the same is going to result in a catastrophy in the make. So currently the 200 day EMA is going to be the thing which to be closely watched. Any breach of the same would provide an opportunity to short with stop loss just above the 200 day EMA. So in the coming week the 5975 should be closely watched.

 

M.Sri Mahidar

Trend is Friend.

flow trade of the current trade

the flow trades as of now is given in the above chart. today afternoon it has triggered a change in trend to long. So the 30 min trend has turned up.

M.Sri Mahidar
Trend is Friend.

Flow historical from 1st of October to 31st January

The flow method which I follow is the flow method which flows with the trade, the trades from 1st of October 2013 to 31st January 2014 is provided above. As per this method, total profit that can be made is Rs.852900/- and loss of Rs.152150 resulting in a net gain of Rs.700750/-. Total trades are 32 trades of this 13 trades were in loss and balance 19 trades are in profit. it can be seen that 19 trades have made profit of Rs.852900/- and 13 trades have resulted in loss of Rs.152150/- this is the result of stop loss which has prevented the loss. The method provides for Profit maximization and loss minimization. Of the trades continues profit trades are 6 trades and continues loss trades are 7 trades. maximum loss trade is of Rs.27000 and maximum Profit of Rs.151500/-.

 

M.Sri Mahidar

Trend is Friend.

 

 

Bank Nifty seems to be forming a pattern which is between two trend lines indicated above. As per this the target for this fall is around 7000 levels which is nearly 30% fall from the current price. So we are in for a big fall if the pattern is correct. But in the mean time there is a trend line (red) which is there which can offer support, the trend line drawn joining the lows of all the bottoms from year 2002 onwards nearly from 2001 onwards, 13 year trend line. Note that 13 is a Fibonacci so we have chances  of this breaking this time. So in short term the support appears to be at 9600 levels and if its taken out all the hell would break loose atleast in bank nifty and which can have ripple effect on other indices especially nifty.

 

M.Sri Mahidar

Trend is Friend.