Nifty: Daily Price Analysis

[SwingKing]

Dear AW10 and raunakagarwal,

You people highly knowledged persons. I have taken nifty short on 4th may2010 and covered on 07th may 2010. Again i have taken 14th may2010. As per my view 4980 is the strong support, again fresh buying may comes. Actually i am ready to cover at that levels. At 4980 level if market makes congestion means we may hope it may go further low to 4800. I know international markets are in negative trend. May be some buying come at that level. I simply use trendlines and MA and patterns and candlestick analysis.

I would like to ask one question you both seniors and tremendous knowledge persons, whether market will honour all these elliot wave theories. Is it correct. I think it may be one of instrument in technical analysis and no more importance. Kindly through some light. If you say yes i will try to learn the elliot wave analysis ( i stopped to learn elliot wave analysis very long back )

Dear Vijay,

Elliot wave is different from other technical concepts. Most of the beginners neglect this principle because it seems complex and difficult to grasp. What I'd say is that Elliot wave has stood its test of time for 100-150 years of trading data available for markets like Dow, Gold etc. It has proved its worth over decades. In all, it enables a trader to have an holistic view of the market. Believe me, once you get the broader picture, your trading "effort" reduces by more than 50% and your trading profitability increases by the same margin. However like any other method of trading, it is important to encapsulate Elliot wave with other analytical method. It is only then when its true value is realized.

Hope you get my point.

Tc

 

[AW10]

Dear AW10 and raunakagarwal,

You people highly knowledged persons. I have taken nifty short on 4th may2010 and covered on 07th may 2010. Again i have taken 14th may2010. As per my view 4980 is the strong support, again fresh buying may comes. Actually i am ready to cover at that levels. At 4980 level if market makes congestion means we may hope it may go further low to 4800. I know international markets are in negative trend. May be some buying come at that level. I simply use trendlines and MA and patterns and candlestick analysis.

I would like to ask one question you both seniors and tremendous knowledge persons, whether market will honour all these elliot wave theories. Is it correct. I think it may be one of instrument in technical analysis and no more importance. Kindly through some light. If you say yes i will try to learn the elliot wave analysis ( i stopped to learn elliot wave analysis very long back )

Hi VijaykishoreBabu.

You are right, Elliot Wave is another way of looking at the market. But if you have one approach of reading the market, then it is not required that u should use EW as well.
In my view, EW cocepts (specially corrective waves) are bit complex to understand.. It gets more confusing if we start using it for short term timeframe. Hence personally, I use EW to assess broader picture and don't use it for shorter timeframe. Some basic rule of EW are good enough to use it for broader TF. Anyway, it is used to form a view on the market. Not to generate precise buy/sell points, so you can afford wider margin for error.

In my view, consistency and our comfort with tools that we use is more important then.. number of tools we use.. So use, what you are comfortable with.. and don't get confused with what Raunak or I am saying here. Due to various background reason, we might know lot of stuff.. but Frankly speaking, one can still do profitable trading with limited knowledge and focused application of that..
It is tricky balance between Depth and Breadth of knowledge. My preferance always is to understand the breadth of the field first, and then go in the depth on each topic one by one.
When u have time, u can move on to the depth of next topic. So maybe if you have nice trend identification system, then use it.. but if you don't know how to identify the end of trend.. then spend time on
improving that piece of knowledge and implement it.

Happy Trading

 

[SwingKing]

Another day of price action where "India" got off cheaply. By cheaply, I mean India did not have to bear the brunt of global negativity in the markets. From the chart below, we can see that our lower trend channel has once again acted as potential support and the prices precisely bounced off from the lower boundary off the channel. Breadth of the market improved slightly towards the end but still remained very negative. Volumes were higher than the previous session and going ahead caution must be the name of the trade.

Every rally must be used as an opportunity to short the markets. World markets are just not stabilizing and there is speculation going on regarding the existence of Euro as a currency. Though this may just be a rumor, but certainly depreciation of Euro is going to have an adverse impact on economies around the world. As of writing, European markets are trading firm and we may expect a bounce back tomorrow. Levels around 5150 and 5180 would be a good region to go short on the markets. In all, very short term target of 4850-4900 remains on the cards and hence long positions should be taken with extreme caution.

 

[AW10]

Sharing my views on EURO -
I think, that is extreme to expect that EURO will disappear / one of PIGS nation or any other country will default, or rating agency would dare to reduce US / UK's rating below AAA. We will get some or other solution (even if that solution is wrong) to come out with predictable disasters. These are not unknown risks to the system, so it is possible to manage known risks. Though the news / sentiment/uncertainty will keep the volatility high.

EURO zone has gone far ahead in using EUR. Cost of going back is too hard for even for Germany/France. Hence I think, the currency will survive. It might be depressed against other currencies but who cares. Infact that is good for export driven countries like Germany. Why would they be interested in strong EURO that makes their export costly ? Undervalued EUR is good for their export. But they are powerful enough to support EUR, when required.

But certainly, this topic is hot and strong enough to shake the volatility. So lets enjoy the volatility and trade what we see..

Happy Trading

 

[SwingKing]

Sharing my views on EURO -
I think, that is extreme to expect that EURO will disappear / one of PIGS nation or any other country will default, or rating agency would dare to reduce US / UK's rating below AAA. We will get some or other solution (even if that solution is wrong) to come out with predictable disasters. These are not unknown risks to the system, so it is possible to manage known risks. Though the news / sentiment/uncertainty will keep the volatility high.

EURO zone has gone far ahead in using EUR. Cost of going back is too hard for even for Germany/France. Hence I think, the currency will survive. It might be depressed against other currencies but who cares. Infact that is good for export driven countries like Germany. Why would they be interested in strong EURO that makes their export costly ? Undervalued EUR is good for their export. But they are powerful enough to support EUR, when required.

But certainly, this topic is hot and strong enough to shake the volatility. So lets enjoy the volatility and trade what we see..

Happy Trading

AW10,

What you have written is true and indeed it seems this should be good for their exports. But, I feel this is just one side of the story.

I think the impact of Euro crisis is being conferred to only Europe. But what about the crisis impacting other economies; lets say India? Health sector and IT sector along with financials have taken the index to levels where it is. But what happens to IT sector in wake of this crisis ? Europe is the second largest market for the Indian IT industry, accounting for approximately $15 billion worth of exports and if the euro continues to weaken, this is going to have sustainable impact on the IT sector.

Coming back to Euro and its impact in Europe, I agree the scenario would boost the exports, will also be good for tourism. But what about imports ? What about the impact of Euro on crude oil prices and the impact of latter on other economies? The bailout package, the austerity measures all seem too good to believe. If governments try to cut down expenses and reduce debt exposures, they will necessarily impact domestic growth patterns. This will potentially drive economic activity downward. What this can further do is impact consumption of goods in Europe; particularly goods made in Asian economies.

There is just so much of uncertainty prevailing that it is nearly impossible to gauge the impact of one news on other. One thing which is sure to last is the "sentiment" impact on the global markets. I don't see "shining" days returning so soon and this goes for Indian markets as well. For me, every rally still remains a shorting opportunity. In a total of 150+ stocks traded in futures n options, there are about 43 stocks which have their bullish patterns intact. About 50 stocks are clearly headed down or are already on their way whereas rest are very near to turning bearish. With such broad based stats, I feel very unlikely for the markets to move ahead.

Let's see how it goes. Eventually I'll prefer to trade what I see on charts. And as of now, picture still remains "Gloomy".

Tc

 

[pshirurkar]

Nice article mr raunakagarwal. I too agree with your views.Thanks.

 

[simple_trader]

Do not know PE and fundamentals.

Going by my crude way of chart reading, it will be matter a few days (2-3 days) to fall to 4500-4600 once we have a close below 200 DMA (4980 spot currently). I mean it will be a sharp fall in case we close below 200 DMA now.

I do not know EW, it may be possible to see some bounce from 4980 again (say to around 5100-5150).

We may see that sharp down move after that. This is one of the possibilities.

We are indeed making a situation for 4500 soon. Though I wish to follow market than any specific target.

Happy trading!

Though my time targets are not proper, price has exactly played out as per explanation.

This is how we are placed now, 5100-5150 NF range will give swing resistance and in case we make a close below 200 DMA now, market would show what all are waiting for. I mean if we close below 4980, then we can see a mini crash in our market for possible down side 4500-4600 (not saying as trading target).

One needs to judge market accordingly now and play for it. There are two big supports 5000 PUT and 200 DMA.

Let's see how it plays out. 5200 on closing basis remains proper resistance level.

One should not trade by gut feel, still expiry week of May series can be bad for our market.

 

[SwingKing]

Another weak session for the markets and the bearishness continues. The entire price action of the day highlighted indecisiveness of investors and traders. The only positive thing out of todays session was that Nifty surpassed yesterday's high, which for the very short term could be used by traders with high risk appetite. Volumes today were low and majority of shares which rose, saw no significant addition of open interest.

Global markets are rallying today as Greece has got it's first installment. I would advise traders/investors to neglect the news and just concentrate on price action. Markets have sold off and can expect good bounce back from these levels. As long as we remain in the trend channel, every move up should be used as an opportunity to short. Be watchful for the levels to short at. Supplying zone exists at 5100, 5180 and 5210. Any weakness around these levels can be used as good opportunity.

 

[scplindia]

Dear Raunak,

Your analysis is spot on and well said. I think we should short even at current levels as the Global crisis is not going to go away that easily, India looks insulated from these problems, but for how long is the biggest question.

Cheers,
Prem Kumar

 

[praveen taneja]

Furthur shorts are good and safe below 4980 only our mkt are not immune to global crisis but still valuations in most of stocks are looking cheap and MFs instead of redemption getting good money so even if chart suggest short now keep eye on other fundamentals of indian economy and good monsoon coming in india