The movement of the market during last one month might have surprised even the hardest of the bulls and bears were bruised the most. Everybody is surprised by the present move and majority of the players have missed the rally they are really waiting for the market to correct slightly so that they can enter into the market and they are doubting whether they can get that opportunity or not or the market would go all the way to make a new high. Now comes the question whether we are into the new bull market and whether we would make a new high. As per my analysis we are far away from that. In my view its still a corrective rally at the end of which we might see a very big correction. But one thing to say don’t ignore the trend as it is what market the market and you can make money only by following the trend and not going against the trend. But as far as my Elliott wave analysis goes it is giving an indicating that we are just in an uptrend is a major down trend and once the up trend is over we might see the market going down very viciously. Whether this would happen I don’t know but my analysis tells that and we have to be patience as time would tell the difference. Now we come to the market as of now. The market is showing considerable strength and bulls are trying all the means to decimate bears and whether they would be successful? They have been successful till now. So what are the things which are indicating strength of the markets? The market is trading above 200 day EMA which is clearly the strength as bulls survive above it and bears below it. Another strong indication is it has broken the trend line drawn from the high of November 2010 which is a very strong indication. nifty has also formed a higher high after a long time which clearly indicates that bulls are strong. Now we have to see whether we make a higher low or not. If we continue to make the same then we can see the market moving up.
It can be seen from the above chart that market has broken the trend line drawn from the high of November 2010 indicating strength. Also not the very high levels of RSI and MACD indicated by arrows. These two indicators are at those high levels last time only in October 2010/November 2010 when the market made as a high and after wards you all know what has happened. whether we would also make a top now and the market would move down only time would tell. The high levels in there indicators is a clear indicating the bulls are too strong now and are refusing to relent. So we have to wait patiently for market to reverse as the bulls as of now are appearing to be having too much strength as every fall would be bought into.
Positive for the market:
• Nifty has moved above 200 day EMA
• Market is above 200 week EMA.
• Daily MACD is in buy mode and moving up indicating the up move may continue.
• Weekly stochastic oscillator is in buy mode and is about to give a sell signal.
• Daily stochastic is in buy move but in extremely overbought zone indicating that we might see a slight reversal in coming days.
• Daily RSI is moving into over bought zone above 75 which it went only during the highs of October/November 2010 and may/june 2009.
• Weekly MACD has give a buy signal indicating that we might see up move to continue for some time. it can only be reversed abruptly only when market falls heavily.
Negatives
• 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
• Monthly MACD is in sell mode indicating weakness in the market.
• 15 week EMA is below 50 week and 100 week EMA.
M. Sri Mahidar
Trend is Friend
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Sunday, February 12th 19.03 IST
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