Near Term Trend: ↔️ (Sideways/Near maturing)
Market Update: Market opened weak in line with weak global cues and traded negatively for the first hour but soon reversed the momentum and ended the day at 25 points up around 10910 levels.
We had gone short in the morning around 10825 but were forced to close our position around 10905. Nifty had to cross above 10950 levels to give us a confirmation that its building a new leg upwards but a weak opening below 10850 suggested a likelihood of a corrective upmove which had either matured or nearing maturity. However looks like Bulls have some more steam left in them. Let me show you the below chart with my wave counts to help understand my point of view in detail.
Market finished a major corrective move in Oct end around 10K levels after that what we are seeing is another corrective leg ( its too slow and has overlapping waves). Move after 10k can best be described as a 'diametric pattern'. a diametric pattern has 7 legs ( ABCDEFG) and it can also be read as double corrective ( ABC-X-ABC).I prefer to read it a single move with 7 legs. Important characteristic of a diametric is leg is similarity between most legs ( usually time wise). Here you can see each leg is taking around 5 to 6 days to complete and today was the 5th day for G leg. I was expecting market to complete the G leg in the morning and reverse from there (but it can last for 1-2 days more). A leg of the diametric measured 600 points (10k to 10600) now G leg has almost measured 575 points in almost same time (10345 to 10915 so pretty close to A leg). Even though the down move didn't materialize today and if the diametric assumption is correct, we should see a down move starting pretty soon. On the other hand if Nifty start trading above 10950 levels then will have to see and modify wave counts slightly.
On the bigger time frame, this up move from 10K levels today has consumed 35 days now and as per the time cycle all bear/bulls move in 2018 have ended around 34-40 days. So there are plenty of indications that either this rally has matured or its very close to maturing. Off course this is just one of the probability as per me and everything will change if Nifty start closing strong above 10950.
Trading Recommendation: We had gone short in the morning and exited later with a loss of around 80 points. Even though there is no change in my overall assumptions we had to exit since trade today was not moving on expected lines. Will watch and enter tomorrow again if I feel so. Nifty is consistently outperforming global markets but theres always a risk of catching up so don't rely too much on this outperformance.
Market Update: Market opened weak in line with weak global cues and traded negatively for the first hour but soon reversed the momentum and ended the day at 25 points up around 10910 levels.
We had gone short in the morning around 10825 but were forced to close our position around 10905. Nifty had to cross above 10950 levels to give us a confirmation that its building a new leg upwards but a weak opening below 10850 suggested a likelihood of a corrective upmove which had either matured or nearing maturity. However looks like Bulls have some more steam left in them. Let me show you the below chart with my wave counts to help understand my point of view in detail.
Market finished a major corrective move in Oct end around 10K levels after that what we are seeing is another corrective leg ( its too slow and has overlapping waves). Move after 10k can best be described as a 'diametric pattern'. a diametric pattern has 7 legs ( ABCDEFG) and it can also be read as double corrective ( ABC-X-ABC).I prefer to read it a single move with 7 legs. Important characteristic of a diametric is leg is similarity between most legs ( usually time wise). Here you can see each leg is taking around 5 to 6 days to complete and today was the 5th day for G leg. I was expecting market to complete the G leg in the morning and reverse from there (but it can last for 1-2 days more). A leg of the diametric measured 600 points (10k to 10600) now G leg has almost measured 575 points in almost same time (10345 to 10915 so pretty close to A leg). Even though the down move didn't materialize today and if the diametric assumption is correct, we should see a down move starting pretty soon. On the other hand if Nifty start trading above 10950 levels then will have to see and modify wave counts slightly.
On the bigger time frame, this up move from 10K levels today has consumed 35 days now and as per the time cycle all bear/bulls move in 2018 have ended around 34-40 days. So there are plenty of indications that either this rally has matured or its very close to maturing. Off course this is just one of the probability as per me and everything will change if Nifty start closing strong above 10950.
Trading Recommendation: We had gone short in the morning and exited later with a loss of around 80 points. Even though there is no change in my overall assumptions we had to exit since trade today was not moving on expected lines. Will watch and enter tomorrow again if I feel so. Nifty is consistently outperforming global markets but theres always a risk of catching up so don't rely too much on this outperformance.
What is your stance on reducing trend of India VIX. It has reduced from 20 to 14 in just a week time frame. Doesn't it indicates about market confidence to follow the current trend, which is bullish right now. I think it will reach to 10950 level by 19 Dec.
ReplyDeleteYou are absolutely right. Low VIX does indicate market is getting confident however it also signifies market is getting complacent. After election results some market players are not expecting markets to be volatile. so a fall from here is likely to catch everyone on wrong foot. When Nifty was at 11750 the VIX was around 12-13. So it can still fall a bit more no doubt about that. Markets can go to 10950 tomorrow that is a possibility but still is not good enough reason to go and buy ( as per me).
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