Nifty opened on a strong note and continued to move up throughout the week, except on Friday where in market reversed. The movement on Friday should be of a concern for the bulls as market has opened strong on Friday moved up and there after mid in the afternoon it just collapsed to close at virtually at a two day low indicating weakness of bulls. Last week I have indicated if the market moves on Monday we have chances of seeing the nifty moving towards 5600 to 5700 levels and you can see nifty has made a high of 5599 and from there it fell nearly 150 points to close at 5458. Last three days gain was surrendered to bears in just half a day signifying the strength of bears. Friday’s movement is one of the significant move and it would not be good for bulls you might be wondering what it is? Nifty has moved near the 200 day EMA and from there it reversed and fell very violently. It is indicating that bulls are not strong enough to take the market above 200 day EMA. Buying pressure is not coming into the market at 200 day EMA indicates extreme weakness for the market. Now we have to see how the follow through happens, if in the coming week also the selling continues then god can only save bulls. Another thing which can is clearly visible on charts is that the rise of the last week was on low volumes than that of the rise, which is clearly indicating that the more buying pressure is not coming into the market.
One significant event which has happened two weeks back which is shown in the above chart. It can be clearly seen that On Balance Volume (OBV) which is very strong indicators has also give a very bearish indicator. It can be seen from the chart above that OBV has been steadily moving up from April 2009 indicating that continues buying has taken the market up and the trend was intact. It can be seen in the chart that in January 2011 BOV has broken the trend line drawn from March 2009 and it was also associated with break of trend line of the price which is clearly indicating the buying has ended and selling is coming into the market. As OBV has broken the nearly 21 month trend line it is clearly indicating that bears have become active in the market and more selling is coming into the market which is clearly shown in the falling OBV. So till OBV turns up bulls would not have any hope.
Negatives for the market:
· Nifty has moved below 200 day EMA.
· Weekly MACD is in sell mode indicating weakness in the market and also every rise would be sold into.
· Monthly MACD has given a sell signal indicating extreme weakness in the market.
· Nifty is below 15 day EMA, 50 day EMA, 100 day EMA
· The deadly cross of 50 day EMA moving blow 100 day EMA has happened which is clearly indicating extreme weakness.
· Daily stochastic oscillator is in sell mode.
Positives developing:
· Daily MACD has given a buy signal.
· Weekly Stochastic oscillator has just give a buy signal
Wolf Wave:
Last Month i have indicated that wolf wave has confirmed and we have a target of around 3500 and we have to see whether the same is achieved or not. Historically it has been seen that the success rate of wolf wave is very high around 85-90%, and virtually the targets are met after confirmation of the same. So we have to see whether the same is achieved or not.
Elliott wave Analysis:
I have indicated nearly at the end of December that if the alternative –II is correct then we have chances of seeing around 5300-5200. And see we nifty has made a low of 5177 and thereafter recovered very fast. Does that mean that we have formed a short term bottom? The answer seems to be “NO” as per Elliott wave it can be clearly seen in the above chart we might have completed the third of third and we might has just started to move up by way of wave four and there after wave-5 would start which would take the nifty below 5177 again towards 5000 levels. Last week I have indicated that wave-4 has all chances of taking nifty towards 5550 levels and there after wave-5 would start and take the market towards 5100 levels. Nifty has made a high of 5599 and there after started correction, which is giving an indication that wave-4 might have ended and we might have started wave-5 which can take the market down towards 5100 levels so we can see the market falling by nearly 300 points we have to wait and see whether that would unfold or not.
Pivot Point Analysis:
As per pivot point analysis, yearly Pivot is at 5716 and it is clearly gives an indication that nifty is blow the yearly pivot and which is a bearish indication and till it is below it, it has chances of moving towards s1 and s2. S1 is placed at 5093 and s2 is placed at 4053 so till nifty stays below the pivot of 5716 we can see nifty drifting towards 5093 and 4093. So now currently 5093 should offer support to the market so watch out for market to move to these levels. Nifty seems to have reached nearly 100 points away from 5093.
M.Sri Mahidar
Trend is Friend.
Sunday, February 20th 19.53 IST
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