nifty technical update as on 16th November 2009

Nifty opened gap up and stayed there only for rest of the day thus not giving any trading opportunity during the day. One feature about the todays trading is it opened above 5000 and stayed there whole throught the day. One feature which should be noted is that the rise today was also on lower volumes that that of friday. for the last week onwards when ever nifty is raising it is raising on very low volumes the same is dipected in the chart below. The reduction in volumes on every rise is a indication that the current strength lacs strength. So in my view it appears that the current move lacs strenght and it is for me appears to be a dead cat bounce rather than a bullish break out. the volumes are suggesting that when ever it corrects it will be a big correction. So bears pleast wait patiently as patience is going to pay in a big way.

it may be noted that GMMA is clearly indicating that the short term MA are above the long term MA indicating that as of now bulls appear to be strong. but other indicators as of now are pointing towards the other end. One of the strongest indicator of strength is DMI is moving down which is clearly showing that bulls lack strength. so all longs should be on very stright stop loss.

M.Sri Mahidar

Trend is friend.

nifty weekly technical update for week ended 14th November

Nifty Technical update for week ended 14th November 2009
Nifty opened on a strong note and continued its up move all through the week. Nifty moved above 5000 but failed to sustain above 5000 for the last three days. Nifty is still maintaining above the 15 day Moving Average giving an indication that nifty is clearly in a uptrend, till the time it maintains above 15 day EMA every fall should be used as an opportunity to short. 15 day EMA is placed at 4893 so till it is above it we should take it as an opportunity to go long at ever rise, if it moves below this we can be short on the market. One of the points to be noted in this week movement is that the nifty is witnessing selling pressure whenever it is reaching or moving above 5000 indicating that it has to decisively move above it to indicate strength. Previously also nifty found it difficult to move above 5000 and after much effort it moved above it and then collapsed two weeks back. So 5000 appears to be a crucial level for nifty. It may also be noted that on 13th nifty has completed 8 months of rise and it happens to be Fibonacci so we have chances of markets correcting after completion of Fibonacci that too 8 so we have to be careful with our trades. If this month also markets move up continually then we have chances of markets moving up for another 4 months. Now we have to see whether there occurs any divergences between the oscillators and the nifty to see for any probable reversal indications. In the present scenario nifty has formed –ve divergence and there after corrected so this correction cannot be ruled out. If we have observed the volumes during the week they through unique feature, the days on which the market has closed positively the volumes were less and the day on which nifty closed negatively the volumes were heavy indicating that some amount of distribution going into the market. Volumes have to increase with rise to confirm the strength of the market. Another thing which has to be noted is that nifty has taken 10 days to fall from 5174 to 4536 and now it has completed 8 days of rise, it has to rise above 5174 in next two days to confirm the strength of the market otherwise there is doubt on the rise of the market. So next two days are going to be crucial for the market so better watch out. I have indicated in the in one of my updates in three weeks back that nifty has broken the trend line from march low and there after it has fell viciously, generally markets have tendency to move up to the trend line and then fall even faster. The trend line resistance is placed at around 5200-5250 so if nifty corrects from those or near those levels then we can be sure that correction might have started.
Elliotte Wave Analysis:
Whatever is discussed in my previous weeks update still holds good and will discuss the alternatives if the market behaves differently.

In the chart below it can be clearly seen that nifty has broke the trend line from march low and now moving up towards the same if nifty fails to move above that trend line then down trend is confirmed or that market is weak that the earlier. And also the another trend line shown in the chart below is placed at around 4800 levels if nifty breaks this trend line then we can be sure that the down trend has started and further down sides are not ruled out.

Directional Momentum Index:
DMI is indicating directionless for the market. So market has to indicate the same so we have to closely watch the DMI as the way it gives a break out the market might move heavily.
Pivot Point Trading Strategy:
Nifty has behaved exactly as per the pivot, nifty did not moved below the pivot and there after it moved above the R1 and also moved towards R2. R2 was placed at 5021 and nifty made a high of 5017. For the coming week the pivot is placed at 4935, if nifty stays above it then we can see 5080 and 5163 and if it moves below the pivot then we can see 4852 and 4704. So trade accordingly.
Point and figure charting:

Point and figure charting which is one of the oldest and one of the best forms of technical analysis provides an interesting picture in the weekly charts.

It can be seen from the above chart that nifty has bearish resistance line which is drawn from the high of January 2008 as per the point and figure charting. It can be seen from the above that nifty has reversed exactly on touching the resistance line and now it is nearing the same. We have to see if this is broken this time or not it has to be broken with volumes then it would confirm the up move or the break out. Generally in Point and figure charting volumes are not considered. So any break and sustaining above the resistance line would open up the gates for making a new high. It is not place at 5150, if market reverses on reaching the same then we can be sure that we might see 4500 in very short time.
M.Sri Mahidar
Sunday 7th November 2009 time 17.35 IST
Trend is Friend.

nifty technical update as on 12.11.2009

Nifty opened on a weak note moved above 5000 and selling pressure took over and finally nifty broke thorough the 5000 level and towards the end it has made a low of 4925 and closed at 4952. it can be seen from the chart the the days on which the movement was positive was on lower volumes and the day on which it was -ve closing the volumes were high including today where in volumes were more that that of yesterday. This clearly indicating that bulls are not as strong as they appear to be and bears are slowely getting grip on the market. nifty has taken 10 days to fall from 5174 to 4536 and now it has compleated 7 days and we are at 4900 levels nifty has to move above the 5174 level in next 3 days other wise it would confirm that we might have made intermediate top at 5174.

From today onwars i would try to present, my observations as per point and figure charting.

As per three box principle nifty has give a reversal of trend as per daliy chart and nifty has to move above 5000 to negate this reversal. if nifty fails to move above 5000 tomorrow then we might see it drifting towards the low of 4536.

M.Sri Mahidar

Trend is friend

Nifty Update for 10th Oct 2009

Nifty moved up as has been anticipated and there after just corrected after that to close at virtually at low of the day. Nifty moved above the R1 of the weekly pivot and failed to move towards R2 which is at 5021 and moved below the R1 by the close of the day thus indicating weakness and also indicating that it might move towards the weekly pivot at 4723. Nifty has to make an attempt to moves towards 5021 other wise we have all the chances of seeing 4723 this week only. It can be noted in todays movement that nifty just moved above the 15 day High EMA and failed to sustain above it. 15 day high EMA is placed at 4907 and it might act as a resistance atleast for very short time. if nifty failes to sustain above it then it should try to move towards the 50 day EMA which is at 4830. It may be noted and has been shown in the chart that the fall of the day is along with negative candle is on higher volumes that that seen during the last four days rise which is clearly indicating that some amount of distribution is going on in the market.

nifty update as on 09.11.2009

Nifty today surprised every body and moved up, but the rise of nifty was on lower volumes indicating that the rise was merely on account of short covering rather than buying. it can be seen from the charty below that nifty has been rasing for the last four days on very less volumes and with every rise the volumes are decreasing indicating that the current up move lacs strength. It can also be seen from the chart that the MACD histogram is also showing weakness as it has not moved above the trigger line. Nifty is just placed at the 15 day low EMA and any move above it would indicate that the the trend might have reversed for the better. It may also be noted the the 61.8% retracement levels is placed at 4935 and any breach of the same has chances of taking nifty near 5000 levels. if nifty reverses wait for nifty to go below 4825 only then only try to short as this indicates the the current uptrend has reversed. It should be closely watched whether nifty moves above 4925 tomorrow as any failure to move above that levels has chances of taking nifty towards 4800.

NIfty Technical update as on 7th November 2009

Nifty Technical update for week ended 6th November 2009
Nifty has opened on a weak note and it has moved down for the first two days and moved below the 100 day EMA made a low of 4538 and on the next day it recovered dramatically for the next three days. Some of the few point to be noted during the movement of the market during the week are hereunder nifty has moved below the 100 day EMA and this is the first time in the last eight months, it may also be noted that market have been falling for the last two weeks and this the first time that market have fallen for two weeks at a stretch thus indicating that market might has just entered into the bear grip and might continue in future also. Breaking of the 100 Day EMA is a significant event which clearly indicating that bears are slowly gaining upper hand in the market. The recovery of the market after the break of the 100 day EMA is as anticipated considering the magnitude of fall so we should not be carried away by the bounce of the market and treat it as a reversal as there are some levels which it is to clear before the trend reversal can said. This week also marks the first week in the last eight months where market has spent below the 50 day EMA thus clearly signifying that market might have become weak. On Friday also markets have moved exactly to the 50 day EMA and then have reversed from there, considering this it appears that 50 day EMA has become a good resistance level for the market to conquer. 50 Day EMA is at 4830 if nifty is unable to sustain above 4830 then I have no doubt that market is going to test the 100 day EMA in the coming days. There are confluence of moving averages at present which the market has to break above 50 day EMA at 4830 and next the 15 day EMA which is at 4842. So for the time being it appears that it would be difficult for the nifty to move above these moving averages. So in the coming week, especially in the beginning nifty is not able to move above these then we can be sure that nifty has bad days to count. For the time being its better to be on short side of the market with stop loss at 15 day EMA.

50% retracement of the market is at 4860 and 61.8% retracement level is at 4935, nifty is going to get resistance at these levels so these the levels which is to be watched or to be observed carefully as any failure to move above the same would indicate imminent fall in the market.
Elliotte wave analysis:
Now we would discuss the elliotte wave analysis of the markets as per the elliotte there are two options which are available which and which are discussed below:
Here we are discussion on the pattern of the market and also future of the market on the basis of elliotte wave. We are assuming that we are correcting the total rise of the market from the low of 2003 to the high of January 2008. It is being assumed that the fall from the high of January 2008 i.e from 6357 to a low of 2539( start of the current up move is assumed to have started) is assumed to be the wave-A and now we are into the wave-B. As markets have moved above the 61.8% of the total fall of 2008 that alternative of ziz-zag corrective wave is ruled out. Now there are only two options of corrective waves is left they are
i. Flat and
ii. Triangle
We would be discussion the above two alternatives first we would discuss the alternative flat and then the triangle
Option- I – Flat
As far are flat is considered it appears that nifty has completed wave-A of the flat at 2539 from the high 6357 made in January 2008.

As per this it appears that nifty has completed wave-A at 2539 a fall of 3818 points and from there it appears that we have started wave- B and it appears that we might have just completed wave-b at 5174. Flat has three wave and as the name suggests all the waves should be of equal lengths and in actual it seldom happens. The minimum retracement for confirmation of wave-B is 61.8% as per elliotte and in the present case market have retraced more that 61.80% but less that the 80% level if we assume that wave –B has completed at 5174. In the present case if wave –B has completed at 5174 then it’s a weak wave-B and we have all the fair chances of market touching the low of October 2008 or at-least the low of march which happens to be at 2539. If we assume the wave-B has completed at 5174 then the minimum retracement levels of the wave –C should be 38.1% of the wave-A so the nifty should fall by not less than 1455 points so the minimum target for nifty comes to 3720 which is nearly 1000 points from the current level. Generally the wave –C of the flat would be more violent of all the waves this giving an indication that if the assumption of flat is correct then we can see more violent market in the coming months which would be more violent than that of last year. At present it appears that the target mentioned is very difficult to achieve but if the market is forming is flat then we would surely achieve the same. Now comes the one of the difficult question of the time period, wave-A has taken 13 months and wave-B nearly 8 months which happens to be 61.8% of the time taken for wave-A so what should be the time to be taken by the Wave-C the time take by wave-C should be at-least 5 months from the start of the same the wave should run at-least upto march 2010. As as per this assumption we have minimum target of 3720 by at-least March 2010.
Now we proceed to look at the other option which is the triangle. And in my opinion we are forming this pattern i.e the triangle
Option – II the Triangle: The triangle is disclosed in the chart below

If the market is forming a triangle then we have all the chances of markets in a corrective mode at-least upto the end of the next year. And in this case if wave-B has completed at 5174 then I have no doubt the nifty would not move above 5000 at-least upto the end of the next year. If we are forming a triangle then the volumes would be decreasing as the time goes by and the volumes would be continually decreasing upto the end of the next year and all would lose interest in the market as market would move no where and once wave-E is completed then the market reacts with bang and we would go on to make a new high thereafter. In this scenario we can be sure that we would not see a new high at least for one to one and half year. This does not augur well for bulls but we have to live with it. The projected targets and the pattern is indicated in the circle in the chart. Now everybody would be wondering what would be the probable targets for the waves-C,D,E. One of the peculiar feature of the triangle is that market moves no where and it will just move in a band and here the band here appears to be around 2500 to 5000 i.e. nearly 2500 points. One of the pre-requisite of the triangle is that each successive wave will retrace at-least 50% of the previous wave and would take the same time i.e.50% of the time taken by the previous wave. It my be noted that wave –A is from 6357 to 2539 a fall of 3818 points and wave-B is from 2539 to 5174 a rise of 2635 points which is more that 50% of the wave –A so the first qualification is achieved. So if we assume the wave-B has completed 5174 then we would be seeing the market fall by at-least by 1350 points so the target for nifty again comes to some where around 3700-3800 levels. It may be noted that this is the minimum target which has to be achieved by the market thus giving an indication that further downsides from 3700 are not ruled out after completion of wave-C wave D would rise at-least by 50% and again wave-E would fall at-least by 50% of wave-D. So if we assume that each wave take only the bare minimum time then we can see nifty in this range for at-least 8 months from now so as generally the minimum targets generally exceeded I have no doubt that we would not enter any major bull market at-least before March 2011. In case of a triangle generally wave-E takes longer time and it would be most boring of all the waves. As if falls of lesser nor as far points are concerned by it takes more time thus making the market unattractive.
So as can be seen from the above that what ever may be the alternative we are in for a bad news for bulls. In both the options we are going to see more damage to stocks in coming months so considering this it would be better for us to take profits from the table and sit in cash and wait for a better opportunity to invest.
Directional Momentum Index:
As have been indicated in the previous weeks also DMI is indicating weakness for bulls and strength of the bears. DMI has been moving continually after negative break out i.e movement of –D1 over +D1 thus indicating the bears are gaining strength. DMI has moved from 24 last week to above 30 and now placed around 31 thus giving an indication that the down ward movement would increase over period of time. So DMI has to be watched carefully as this would give a clear indication as to whether bears are gaining strength or losing strength. So its pointing towards bad days for bears.
Pivot Point Trading Strategy:
I am not providing any table this time but I would be discussing the same nifty has moved as indicated in the table given last week. Nifty stayed below the pivot and moved towards S1 and then jumped towards pivot and reversed on just moving above the pivot. So for the current week the pivot is place at 4723 so any breach of the same would take the market towards 4611 and if it is broken then we have chances of seeing 4450 and if it stays above 4723 we have chances of seeing 4909 there after 5021. So you can trade accordingly:
Turtle Trading:
20 day phenomenon has given a sell indication at 4904.
Current trend - Sell
Go long above 5182
Square off – 5054
Go short below: 4538(add Positions).
ATR - 104

M.Sri Mahidar
Sunday 7th November 2009 time 17.35 IST
Trend is Friend.

Nifty weekly technical update for week ended 31st October 2009

Nifty Weekly Technical Update for week ended October 31st, 2009.
The worst fear which every body was not expecting has happened, but the followers of these weekly updates might not have been surprised as I have indicated last week only that we might have entered a corrective phase once the support line is violated. It appears now that we might have entered as corrective market after nearly eight month. Please note the correction has started in the eight month which happens to be a Fibonacci. This has happened so many times as market tends to corrective after entering the Fibonacci month or after completion of the Fibonacci. I have been seeing for the last so many years and most of the times the market has reacted on Fibonacci months, weeks or days. So we cannot ignore the same. Last week I have mentioned that all the –ve factors are increasing and that positive factors are decreasing and the correction is round the corner and the same seems to have happened. It may be noted that nifty has broken past so many crucial support levels they are 5000 4900 and have gone below the 4700 level and just closed above it. Nifty has closed in bearish candles for two consecutive weeks this has happened for the first time in the last eight months so this cannot be ignored and taken lightly. The following has happened in this week nifty has moved below the 15 day EMA low (only third time in eight times) it has moved below decisively below 50 day EMA (only second time in last eight months). Nifty has moved below the 50 day EMA at 4850 it moved below it on Thursday opened with gap up on Friday just touched the 50 day EMA and then tanked indicating that bears are having upper hand and they are willing to dominate the market in the time to come. As nifty has moved below 15 day EMA low we should take every rise as an opportunity to short till nifty moves above 15 day High EMA which happens to be at 4993. So till 4993 is taken out during the week we have all chances of nifty moving down. Nifty currently appears to be in a very very oversold and there are positive divergences in hourly chars for RSI, MACD etc., giving an indication that bulls might stage a come back during the week. The rise which we will be witnessing this week if does not move above the 15 day EMA high we would have excellent shorting opportunity. It may also be noted that all the major stocks which constitute nifty are trading below significant support levels and it appears that broder market appears to be weak.
Now we will see on weekly charts. Nifty has made a seven week low during the week this has happened for the first time in last eight months signifying the strength of the fall. On weekly chart both MACD and TRIX has given a sell signal during the week this is the first time that these have given a sell signal after December 2008 indicating that the broder market has turned weak and we might have started a down trend which has chances of lasting for atleast 3 months. These two indices have not given sell indication even during the largest correction during the post budget week. This gives a clear indication that we might has entered a corrective phase and who ever are long on the market have to take a decision to take profit or prepared to take loss other wise they will know that atleast 50% of their portfolio would be wiped off as the bears market take very less time but they fall very fast. In weekly charts DMI is moving down indicating clearly that bulls are becoming weak and also –D1 line is moving up and +D1 line is moving down indicating the bears are slowly coming into the market

It may be noted that nifty has breached 4900 and 4700 giving an indication that we might start a vicious bear market and it is advised to book profit as has been indicated last week. We can buy when ever once again market gives such indication. Till then we have to protect our principle as we will be in a position to buy when the market gives a reversal signal.

Positives for the market :
• Nifty is still above 100 day EMA.
Negative for market.
• The trend line drawn from march low is broken
• Nifty is below 15 day low EMA.
• -ve divergences still exists in oscillators – ROC, RSI, Elder bull ray
• Volumes are not still increasing.
• DMI has given a sell signal indicating the bears have just gained upper hand.
• On weekly charts TRIX and MACD are in buy mode and are just about to give a sell signal

Elliotte wave analysis: Eiliotte wave analysis and also targets for nifty in this correction i.e extent to which nifty would correct and the period for which nifty would correct if would furnish in my next weekly update. So wait for the same.
Directional Momentum Index:

DMI is has moved from around 23 to 25.78 after giving a sell indication clearly indicating that momentum is down and that the trend( current down) is gaining momentum.
Pivot point analysis:

Last week nifty has moved won as indicated. And as per pivot point analysis nifty has broken so many pivots indicating weakness. It can be seen from the above table that nifty has moved below the monthly pivot and also yearly previous pivot (4856) indicating that nifty has become weak and the down trend may continue. As per monthly pivot as nifty has moved below it the next support level is only at 4538 and as per yearly previous next support level is only at 3355( which appears to be impossible at this point of time but can be achieved.)

Turtle Trading:
Turtle Trading - 20 day Phenomenon (gave sell indication at 4904)
Current trend – sell
Go long above – 5182
Square off - 5182
Go short below: 4682
ATR at 90

M.Sri Mahidar
Sunday 1st November 2009 Time 7:10:40 PM IST.
Trend is friend