Nifty Outlook and Trend for 11th Apr 2019

Short/Near Term Trend: ↓(Down)
Medium Term Trend: ↑(Up)

Market update: Nifty opened flattish inspite of an overnight fall in US stocks but failed to add points above opening price and once again slipped to sub 11600 levels. It closed down 80 points at 11584.

Yesterday we had mentioned that rally for now looks back on track and as long 11600 is held there are chances of another spike up. However nifty again slipped back below 11600 proving us wrong and changing near term trend to 'down' once again. Overall market trend has once again turned neutral ( i.e, both near and medium term trends are in contradiction to each other).

There is just a small possibility that last 5 days fall from 11760 to 11574 has completed a contracting triangle correction. If its the case we should see a sharp spike above 11670-11700 once again and if that sustains Nifty can attempt another move up towards new high. However if weakness persists than Nifty can see even lower levels but it will take couple of very strong bearish session to change the medium term to 'down'.

Overall we have been saying that there is a likelihood of market making a intermediate/short term top at 11760 but the problem is its been 5 days already and Nifty has not given any meaningful down move ( and the last few days fall is looking like a corrective move for now) which raises the question if another up leg is pending for this rally. The move from 11320 to 11760 had taken 7 days so we still have 2 more days to go and if its actually a trend reversal then Nifty should beak below 11320 in next 2 days (coming Friday). But this level is more than 250 points away hence we say we need big downside movement or a strong bearish move in next 2 days.

In nutshell, If Nifty keep slipping then keep an eye on 11320-11350 levels, any meaningful fall can only be expected once this level is taken out on the other hand if Nifty again trades above 11670 levels followed with strength above 11700 then a strong possibility of a fresh 52 week high on Nifty is there.

Market has moved a lot in last 2 months so there is always a risk for a big correction/down or a trend reversal which can come suddenly and without warning hence all longs needs to be covered with a proper SL

Happy Trading!.

Nifty Outlook and Trend for 10th Apr 2019

Near Term Trend: ↑ (Up) 

Market update: Nifty opened below 11600 levels but failed to break below 11550 levels. Encouraged by lack of selling pressure, bulls pulled Nifty smartly and it closed at 11670 levels ( up 70 points).

Yesterday we had mentioned that bulls need a strong push soon else there is a chance of bears taking over. We did see a smart pull today and though Nifty did not cross above 11700 levels there are few indicators ( including  the fact that entire fall from 11760 has too many overlapping waves) which are probably suggesting that sideway or neutral trend we have been witnessing for last 5-6 days is over for now and probably Nifty is ready for another thrust or move on the up side.

Overall this remains a corrective move and the criteria mentioned in previous post ( High PE ratio etc) still stand however the most important indicator ( I.e, price) is again pointing to another move on the upside. Market has already spent 4 days after hitting 11760 and we are only less than 100 points below it. So if it was actually a bear move, then we should have seen a strong move on the downside by now ( which didn't happen). So for now we believe trend has once again changed to 'UP' and probably Nifty would wants to give another shot at hitting new all time highs.

If markets again break below 11600 and then goes on to break below 11550 levels then the immediate trend will again change. 

Happy Trading!

Nifty Outlook and Trend for 9th Apr 2019

Near Term Trend:↔(Neutral/Upswing maturing) 

Market update: Nifty opened at 11700 but quickly dropped to 11650 levels within seconds after opening and even dropped to 11550 levels intraday. It finally closed at 11600 down 60 points.

In our previous post we had mentioned "if Nifty fails to cross 11710-11720 levels then 11550 levels can be tested again and if that happens it will be a lower top lower high kind of a scenario which can invite further selling". That's exactly how the markets played out today, it failed to cross 11700 levels and dropped below 11560 levels. Now on intraday charts we have a lower top lower high type of a pattern in place and Bulls now need a very strong push immediately else there is a chance that bears will get active (after a long time).

Overall trend still remains neutral ( we have been marking the trend as ' neutral' since last 4-5 days and clearly Nifty indeed can be seen trading flattish or sideways since last 4-5 days). For any bullish scenario to play out, bulls need Nifty to cross above 11700 levels if that happens trend will again change back to 'up' however we need further (infact lot more) weakness to change the trend to 'down'. Its entirely possible that this sideway movement is just a temp correction post which Nifty will resume its uptrend or at the same time its also possible that for now an intermediate top has been hit (at 11760). VIX also shot up 10% and closed above 20 which might indicate that markets are probably bracing themselves for high volatility in near term.

There are plenty of technical indicators which continue to suggest a likelihood ( just a possibility mind you) that an intermediate/short term top has been put in place already. We have been mentioning these indicators in previous posts but to sum up:

• Entire pull back from 10K levels has consumed around 280% of time of previous fall ( max time allowed as per neo-wave is around 300%)
• Number of trading session from lows of 10k are coming to be 108 (which matches exactly with the previous cycle ( 9950 to 11750)
• On weekly charts, markets posted a spinning top last week
• Since the uptrend started from 10k nifty has posted 4 gaps (daily chart) and the 4th got filled last Wednesday and turned into an exhaustion gap
• PE ratio touched 29 ( which is highest for last 10 year or so)
• Last 9-10 days rally (from 11320 till 11760) is carrying a very strong negative divergence

Now apart from these, there are plenty of other things which are indicating a possible top but the key indicator which is 'price' is still in bullish mode and as long as Nifty is strong on price charts it can continue to soar higher and higher ( all other things can be ignored). But that doesn't mean that one should get complacent or overexcited after seeing the 1000 point rally. This week is very important and probably will set a clear trend for times to come.

Happy Trading!

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!