The movement of nifty has negated any of the bullish sentiment which bulls have tried to bring and also lot of analysts have started to term it as new bull move. But the Elliott wave and price movement has been clearly indicating that the bulls market has not yet started. Bear market ends when there are so many bears around and at the present time it seems still bears are faaaar away as at every rise the bulls come and say that bull market might have started. Bull market would only when the market rises and all the people would say that the rise is temporary and market would fall after that. So we have to simply wait for the moment for the bull market to come. Elliott wave is clearly indicating that the wave structure has still not completed and we are still far away from the bottom. i have not see times where when interest rates and inflation are raising and market has also kept raising, generally market is inversely related to inflation and interest. As currently interest and inflation are rising continually we can expect market to make new lows. So be prepared for it. Now we come to the market. In the current week bulls were running for cover and it appears the bears have come with a bang. This week market moved below all the important moving averages and now it is below all major moving averages. One of the noticing features is that this week is that nifty once again has found resistance at 200 week EMA and fell from there and that too very violently. This is the second time that nifty has found resistance at 200 day EMA firstly it happened in July 2011 and secondly it was this time. Previously in July market has fallen 20% and we have to see whether this time also the market falls at-least this time also till now we have fallen only 7-8% only so we have at-least another 12% fall in the market. So we have to use all the rises either for liquidating our positions or going shorts. So bulls be care full.
It can be seen from the chart indicated by black arrow that MACD has just give sell signal and the gap between average and trigger line is increasing and if MACD has to come all the way down the we can expect the market to go down from current levels after brief consolidation. So be prepared for a fall. Till the nifty is below 200 day EMA we have all the chances of moving down further.
Another important event which is happening is that nifty is once again at 200 week EMA. Last two times in august and October it has found support at that 200 week EMA and then reversed towards 5300 levels, this is the third time in last three/four months that nifty is finding itself at the same point. As this is the third time it has all chances of breaking it. But we have to wait and see. Once nifty breaks the 200 week EMA the fall might become very prolonged and also very violently down ward so once 200 week EMA is taken out on weekly basis bears can rejoice. 200 week EMA is at 4856. So this level is to be closely watched.
Positive for the market:
• Nifty has exactly taken support at 200 week EMA.
• Weekly MACD is in buy mode
• Daily MACD is about to give buy signal.
Negatives
• Market is finding resistance at 200 day EMA.
• 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
• Daily MACD has a given a sell signal.
• Weekly Stochastic is in a sell mode.
• Monthly MACD is in sell mode indicating weakness in the market.
• 15 week EMA is below 50 week and 100 week EMA.
This week I am not giving any Elliott wave update as there is not much which has happened in last 10 days. This time I would be giving the indication of the broader market and what its indicating for them for mid-caps and micro caps. One of the noticing features is the all the indices have formed a heads and shoulders pattern and they has broken though the neck line and the minimum target is yet to be achieved. So it is clearly giving an indicating the carnage in the market is still going to continue before any respite for the markets. As you are aware that and also in have indicted in my earlier updates that nifty has formed H&S pattern and neck line was broken in august and we have target of around 4200 for that which is still to be achieved. Now see the same pattern in other indices which are given below
It can be seen from the above that all the indices including nifty are mimicking, and all the indices are 15% away from the minimum target so we can expect indices falling at-least 15% from current levels. One of the noticing features of the 15% level is that if the indices achieve the minimum target then the indices would be at the may 2009 levels(post election result) gap opening level and any move below it we can see a vertical fall in the market to the march 2009 levels so now we are entering into crucial levels for the market and bears would try to take wind away from the bulls. So we are in for some very eventful months in our market and also world markets.M. Sri Mahidar
Trend is Friend.
Sunday, November 19th 22.00 IST
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