Nifty Outlook and Trend for 8th Apr 2019

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

Market update: Nifty opened slightly positive and kept trading in a narrow band between 11620-650 before shooting up to 11685 levels just before close. It closed at 11665 ( up 65 points).

Yesterday we had mentioned that any corrective pull back in strong move usually lasts for 2-3 trading session and main trend resumes after that. Now we are not saying that main trend has resumed again, for that we needed a close above 11710-11720 levels and Nifty is still short of that hence for now we keep the near term trend as 'neutral only'. Market has given a good sharp rally but a little more was expected so it is entirely possible that market again turn down and test 11550 levels in next 1-2 trading sessions and if that happens then it will be a lower high lower top scenario and which can invite further selling. On weekly charts, Nifty has posted a 'spinning top' pattern which again is a sign of caution.

Overall it seems ( for now) that rally from lows of 10585 has completed a 5-wave up  move. Wave 5 of this upmove began from 11320 and finished at 11750 now as per rules of Neo-wave , for any trend to reverse, the last wave should be retraced fully in faster time. Now wave 5 took 7 days to reach 11760 levels (from lows of 11320) and we have already spent 2 days correcting this move. If this is actually a counter move then Nifty should break below 11320 in next 5 trading session ( i.e. by coming Friday). However if Nifty fails to do that then probably this entire up move has more legs to go.

Last couple of days fall ( from 11760 to 11560 levels) has measured approx 200 points and today market has retraced around 61.8% of this fall (which comes around 11685). That's another reason we have kept trend as 'neutral' only. We need to see strength above 11700 on Monday else its possible that todays upmove was just a pullback ( of another pullback) in which case 11550 levels can be tested again pretty soon. However if 11720 is conquered and Nifty start trading above it then probably higher levels can be seen again.

Happy Trading!!




 

Nifty Outlook and Trend for 5th Apr 2019

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

Market update: Nifty had another weak session inspite of RBI cutting rate by 25 basis points and it slipped to sub 11550  levels and closed down 40 points @ 11600.

For now weakness continues and yesterday we had mentioned that the fall which was seen today has halted the uptrend of markets for the time being. However it doesn't mean that downtrend has begun, overall Trend as per us remain neutral for now(no mans land). We have also been mentioning a possibility of market making a near term top here and it still remains a possibility.

Few days back when markets had corrected from 11550 levels and touched 11320, it had taken 2 days and it is observed that any correction ( downside or upside) against a strong trend usually last for 2-3 trading sessions and after that the main trend resumes. Today was the second day so it remains to be seen if markets attempts to take a support around 11550 levels tomorrow and try to test 11750 levels again.

Today was a classic example of  'buy on rumour sell on news'. Nifty was seeing a positive movement since last few days expecting rate cuts from RBI , now after the event has passed , some amount of profit booking was seen. Now there was no trigger remaining in near terms for bulls to continue holding position and it seems they decided to book some profits. Now it will be interesting to see if the profit booking continues or the uptrend resumes once again. For bears to take control of markets strong follow up selling is required below todays low. Nifty now has good support at 11350-400 levels and until these levels are taken out, trend will remain Neutral. On the other hand strong close above 11700 levels now will firmly put markets back on track and uptrend once again will resume.

Technically we continue to believe that entire rise from 10K levels ( last 5-6 months) is a corrective move and it has taken markets > 280% of time to break above previous high, this is not a sign of strong markets but a weak market. Now the corrective move may extend from here ( which will force us to change our wave counts) but there also remains a possibility that its already over hence if someone is looking to buy then he should enter only once 11700 level is reclaimed by bulls. Below 11700 bulls are weak and are prone to an attack by Bears.

Happy Trading!


 

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!!