Nifty Outlook and Trend for 4th Apr 2019

Near Term Trend:↔(Neutral/Upswing maturing?) 

Market update: Nifty opened positive and even hit a new high above 11750 but that saw some profit booking later and slipped to 11630 levels. It closed at 11644 down 70 points.

We had mentioned in previous post that market has been posting candle patterns on daily chart which are generally associated with topping pattern so there is a chance that market may correct from here. Even though market has seen just a 70 point fall which can be just a temp correction, there are plenty of indicators pointing towards a possibility of a bigger correction hence one need to be a little cautious here and see if this move down is transforming into something bigger. Today market posted an engulfing candle which broke below the lows of previous 2 candles.

Yesterday,We had also pointed out an uncanny resemblance in time cycles of last couple of big moves in market. Last years markets had started a down move from 11750 after completing 107 days of a corrective move and now again 107 days have been completed yesterday and on 108th day (today) we have seen some sort of a fall. Now its entirely possible that market again move up above 11750 post another high but at the same time there is also a probability that ABC corrective move has finished at 11760 today.

We should get a confirmation in next few trading sessions (RBI policy is also due) for now the pattern of fall looks strong hence we have changed the near term to 'neutral', We need further strength above 11760-800 levels now to change the trend to up. If we see weekness below 11630 levels then expect weakness to continue for now.

Happy Trading!

Nifty Outlook and Trend for 3rd Apr 2019

Near Term Trend: ↑UP

Market update: Nifty had another positive session today and it closed 40+ point up at 11713.

Nifty today  opened slightly positive (inspite of a massive rally in US stocks overnight) & kept trading in a narrow band and shot up in the fag end of session. In the process it again posted a 'hanging man' pattern on the daily chart. Since last 3 days market have been posting pattern which can be identified with a topping pattern now this doesn't necessarily mean that market has topped out but just shows that there is a  possibility of one.

Nifty had seen a slight selloff during last hour yesterday and to open bearish possibility it needed a follow up weakness below yesterdays low but that didn't happen. Also markets didn't post a new high as well so overall it was an indecisive day of trade

Nifty PE ratio today closed at 29.24, now this is even higher than what we had in 2008 and 2018 (aug). Historically speaking whenever PE has reached 28+ we have seen a good amount of correction, now many are saying that this time the things are different and earning growth will pick up which will put PE back again at reasonable levels hence high valuations are justified. Now it remains to be seen to which extent such justifications are right.

Price action ( which is the most crucial indicators) remains in buy mode along with many other technical parameters.

Overall technically the entire rise from 10K levels today has completed 107 days which is around 280% of total time taken by previous fall ( 11750 to 10k levels). now here is one very interesting thing we noticed today.

Last year in Feb/Mar, Nifty had fallen from 11171 to 9950 at that time it had taken 38 days too ( current fall from 11750 to 10K also took 38 days) and after that market rallied from 9950 to 11750 and guess how much time market had taken to reach 11750 from 9950? exactly 107 days ( 280%) now again we have taken 107 days (today was 107th) so there is one very uncanny similarity. Again not saying what happened last time will also happen this time but one of the key rule of technical analysis is that " history repeat itself" so one should be watchful.

Happy Trading!


 

Nifty Outlook and Trend for 2nd Apr 2019

Near Term Trend: ↑UP

Market update: Nifty opened strong (once again) and kept trading above 11700 entire day however late bout of selling pushed it below 11650 and it closed at 11670, up 45 points.

Sensex today made an all time high and for a moment around 230PM it seemed even Nifty will follow suit but it missed it by 10 odd points. Markets today posted an shooting star candle on daily chart which is followed by a hanging man pattern (which it had posted on Friday). This again is a possible topping pattern which signify that probably bulls are losing steam and bears can take over however this is not the only time market has posted a topping pattern. Last few days market has been consistently indicating ( one way or other) that it may correct from these levels but on price chart there is absolutely no weakness whatsoever and markets continue to climb higher. So does it means markets will continue to go up like this and keep conquering higher levels? answer is absolutely no.

Markets may have posted a new high today (sensex) but overall the rise is too slow hence it will qualify as a corrective move only and the fact that we have a new high on sensex doesn't change the bigger picture.

In our previous post we had mentioned that recent move ( from lows of 10600) is wave C of ( ABC) and which is in its last leg (wave 5)  & the wave 5 has measured exactly as wave 1 (both in terms of price and time). Today wave 5 has become bigger than wave 1 but that was always possible ( wave 5 ending around wave 1 was just a possibility and not a given). So technically we are still in wave 5 and once it ends we are looking for a deeper correction. Entire move from 10600 to 11740 should be corrected by atleast 38% to 50% which means 11150-11300). Now there are many who believes that market are in a pre election rally and will remain stronger till the time result comes out. It may be true but we continue to believe that markets can surprise with a sharp move down before that happens. Market has good support at lower levels and its entirely possible that we see a drop to 11300-11150 levels pretty quickly ( I know it doesn't sound possible at this stage). We are saying even if market scenario is bullish it can see lower levels of 11300 11150, however if the entire rise is just a corrective rise ( which we strongly believe it is) then we can see even lower levels.

However keep in mind there may be 100 things indicating that markets can correct from here , there is one key indicator ( price) which is not giving any weakness sign whatsoever hence trend for now remains up. But markets can surprise anytime so one must be prepared. For now we will continue with our cautious tone. Agreed we have been cautious since quite a while now but we also mentioned that markets can continue to stay overbought, euphoric and keep trading in  'top area' for extended period of time.As long as price movement do not confirm the reversal, it will be premature to say if the current uptrend is over. Having said this, the fall which follows after such movements can be pretty strong.so if one is long then he should exit once Nifty break below 11575 ( Fridays low) and wait for fresh entry point.

Happy Trading!

Nifty Outlook and Trend for 1st Apr 2019

Near Term Trend: ↑UP

Market update: Nifty opened again with a 50 points gap at 11630 levels however dropped to 10575 levels before bouncing back again to 10620 levels. it closed at 10620 up 50 points.

Yesterday we had mentioned a possibility of Nifty making a double top at 11565 levels (if Nifty had fallen below 11500 levels) however since markets made a new high that probability is not valid now. Having said this the entire move from lows of 10600 is getting over stretched and appearing to be in its final leg since quite a while now  ( In our wave count we are counting it as wave 'C' of ABC of second corrective). Let me explain.

lets analyze wave count of recent move from 10585 to 11630 (todays high)

Wave 1= 10585 to 10880 = ~300 points and took 4 days

Wave 2 =10880 to 10730 = ~150 points (high point of wave 2 was 10930 as it was an irregular correction, so the fall could be measured as 200 points too but that doesnt matter)

Wave 3= 10730 to 11560 = ~830 points ( ~278% of wave 1)

Wave 4= 11560 to 11320 = ~240 points

 Wave 5= 11325  to 11630 = ~300 points & has taken 4 days as well ( matches wave 1)

Usually wave 5 matches with wave 1 especially if its part of overall corrective pattern ( wave 5 of wave C).This can also be read as final leg of final leg.

There is no doubt that markets are in a uptrend however evidence after evidence are piling up that a serious correction can begin any time. Market remains euphoric, over bought and seeing strong negative divergences on multiple indicators ( daily RSI etc).  Many feel that Nifty is already done with the correction ( fall we saw last week when Nifty fell to 11320 levels) however it was too small and too shallow to be called as a full correction of entire wave. It may be a correction for one of the inner wave of the move (wave 3) but the entire move has still not been corrected and a fall is still pending and overdue now.

In any trend retail traders or the common man is usually the last one to enter ( wave 5) and that's when the trend ends, if our wave count is correct then wave 5 is ongoing ( and achieved similarity with wave 1 today) and last 3-4 days markets is seeing lots of euphoria and optimism which could be a sign of common man entering now hence there is good chance of this move getting over (for now).

Coming back to entire move from lows of 10k (Sep last year) to 11630, the total time has reached around 276% now ( which is rare). Though we did see some correction exactly from 261.8% levels it was still part of the ongoing move only and the total corrective move still continues. Now crossing 261.8% is not common and but still within rules of Neo wave. Considering all these possibilities probably markets are trading in borrowed time now. On price charts it continues to trade positively hence trend remains up but like we mentioned earlier as well, it can change suddenly and without warning.

Happy Trading!

Nifty Outlook and Trend for 29th March 2019

Near Term Trend: ↑UP

Market update: Nifty opened around 11470 and kept adding strength as trading progressed and closed at 11570, up 120 points.

Todays close assume lot of significance as the close has come above the recent high and above yesterdays high so that definitely is a sign of strength. All technical indicators continues to remain in 'buy' zone as well. However one thing which didn't seem right in todays rally was the negative divergences seen all around (on most time parameters and with most indicators). Daily RSI has shown a very strong negative divergence which calls for some caution at current levels.

Both Sensex and Nifty closed around recent high and it needs to be seen if market can build further strength over it or again slip back to below 11500 levels from here (If it happens then probability of a double top like scenario can arise).

Nifty has a good support at 11200-250 levels and till this level hold the near term trend will remain up only however one should also keep in mind that technically markets are overstretched and inspite of recent correction it remains on the overbought side. Looking at PE is sitting at 28+ levels now and last time it had reached 28+ was way back in 2008(6300) & then in 2018 (11750) and on both occasion we did see a good fall.

Market sentiments continues to be on very bullish side and euphoria is reaching extreme levels as we approach elections. Markets are probably factoring in BJP victory but how far elections can take markets that remains to be seen. Another thing to keep in mind is that since last 4-5 days  market has seen a movement of 100-150 points on each day. Now this again could be significant factor as we move forward ( big movement can become new norm now).

In nutshell markets remains buoyant and trend remains on the upside however considering various other things there is also a probability of markets making a short term/medium term top so be cautious.


Happy Trading!!


 

Nifty Outlook and Trend for 28th March 2019

Near Term Trend: ↑UP

Market update: Nifty opened strong today (infact with a gap up) and went on to touch 11540 levels but couldn't sustain the momentum and dropped below 11500, touched a low of 11430 and finally closed at 11445 down 40 points.

Yesterday we had mentioned that its important for Nifty to sustain above days high (11490) and to cross 11560 levels. However while Nifty opened above 11500 it couldn't sustain the momentum and crashed 100 points from day high. This is not a sign of strong markets and raises questions if yesterdays pull back was merely a temp pull back. If we see further weakness tomorrow below 11430-11400 levels then probably we its going to test 11320 levels again ( or even lower).

There is lot of euphoria and optimism right now in the markets ( Nifty Apr future at 100 point premium??) where everyone is super bullish and expecting markets to touch 12k+ levels ( especially after Goldman Sachs upgrade). But key thing to note is that Nifty is still below the level it was trading at the time of upgrade. All these upgrades and downgrades may not work directly & immediately. Many times we have seen bottom beings made at the time of downgrades & top being made when there are upgrades ( now not saying that this is how its going to work even now) but sometimes smart money uses these events to enter/exit markets so one should not give too much importance to them. If nifty has to move up, it will move up even if these agencies downgrades India. In Summary, market movement determines upgrades/downgrades and not vice versa.

Now coming back to Nifty, since markets have failed to close above yesterdays strong move (which felt like start of a new uptrend) there is a possibility that it was just a bull trap to lure in last of the investors or to get rid of weak shorts which had entered markets in last few days. To reaffirm its bullish stance now Nifty needs to cross 11540 11550 levels and close above it but if it slips below 11400 levels then weakness might persists for times to come.

Timewise/price wise we continue sit at important levels and the high hit by nifty 11560 levels was exactly at 261.8% levels ( which we kept mentioning in our previous posts). So one needs to be super cautious now. There does remain a possibility that markets have already hit a near term top and might reverse from here but the charts are still exhibiting strength and there is plenty of support at 11200 levels and till the time this level is not taken out, the near term trend will remain strong.

Happy Trading!



 

Nifty Outlook and Trend for 27th March 2019

Near Term Trend: ↑UP

Market update: Nifty trend opened tentatively and stabilized around 11370 levels before shooting up to 11490 levels in second half. It closed 130 point up at 11480 levels.

When markets are in a trend the counter trend movement usually don't extend beyond 2-3 days and that's what we witnessed today. Todays movement was pretty strong and important thing was that Nifty filled the gap it had created yesterday ( that takes out the bearish implication of the previous gap down). Now if markets can sustain above 11490 levels and goes on to cross 11560 levels then probably we are going all the way to 11750 or higher.

However its not given that markets are done with the correction and the entire range 11560 to 11320 should be observed carefully as the break on the either side could prove to be decisive. If nifty again reverses from here and goes on to break 11350/11250 levels then bearish implications will surface again.

In nutshell nothing much to add today. Nifty remain in a uptrend ( corrective or impulsive doesn't matter) and weakness it was showing since last 2 days has been negated to much extent by todays strong bullish move. Now we need to see if todays move is genuine move and whether its able to sustain ( if Nifty again reverses from here then probably it was just a false move) on the other hand strength over todays high and a cross over above 11565 levels will signify that the current up move has some more steam left & markets may see higher levels from here.

Happy Trading!