NIFTY MAY ENTER BLOW OFF RISE STATE FROM THE TUESDAY.
Last week market opened at 3478.70 & this itself was the low of the week. It then continued to rise till 3717.05 to register the high of week & finally closed the week at 3620.70.Thus it gained the146.75 points during the week.In percentage terms it gained approximately 4.2% compared to previous week’s closing.

RETROSPECT: -
 Our recommended long position entered at 3360,was advised to hold on & it is in deep positive territory.At the same time twice we could trade against this long position to short & cover again.

SENTIMENTS: -
Market participants are turning now aggressively bullish.We mean the shadow of bearish phase is moving in background.Our index has convincingly crossed the 3500 & entered the new orbit & similarly DJIA has crossed the 8300 resistance level to enter the higher orbit.Stress test fear has evaporated.The election uncertainty is now the only impediment for run away bullishness.

ELLIOT WAVE THEORY: -
 For the past many weeks we are trying to decipher the wave count from the 27 th Oct,2008 low of 2252.75. As discussed in last issue, we are left with the only two choices of flat correction or the impulse move from the 2252.75. The same has been shown in the chart below along with their wave counts.

 

However it can be seen from the chart whether it is flat correction or the impulse move the, the wave unveiling from 2539.75 should have impulsive structure consisting of five waves.Narrowing down to still shorter terms it has 4 to 5 probable wave counts from 2539.75.Ideally no crystal clear wave count without flaw is visible at the moment & needs further unfolding to conclude with clarity.In the EWT terms we are in the middle of the wave count & therefore this pattern will end with additional same amount of time & more or less same amount of price coverage.It is precisely for this reason we have drawn pink color trend line & as long as this trendline is not breached decisively traders should hold on to long positions.However on shrter term perspective we have shown two most probable wave counts on hourly chart with the blue & green colours.In the green colour wave route it should not breach the low of last Friday(3582.90).Then the next rise will terminate somewhere near 3800-3820 range.We rate the probability of this as only 35%.In the blue colour wave count we see that it will not bounce above the 3665 & decline below 3882.90 & must touch at least 3550.If this happen then it should give a massive blow off rise of 600 points from that low & that to by the Friday 15 th May,2009.We rate the probability to be 65%.In our opinion Monday’s working will resolve this discrepancy.


 
JAPANESE CANDLESTICK:-
Weekly & monthly candles & their combination remain in distinct bullish phase & keep confirming the our last week’s stance.

CHART PATTERN:-
Last week we had shown the flag formation & indeed gave the target of 4400-4500.However it preferred to consolidate in the range of 3720-3580 for last five days.Theoretically more the consolidation higher the target & better the chances of pattern fructifying.

PULSE-READING:-
There is no change from the last week’s reading.However we are getting an inkling at our heart that from Wednesday onwards a stupendous blow off rise will start.For the benefit of readers we are reproducing our last week’s pulse reading.
This has no logic,theory,data or system.It is the experience coupled with the sound of soul.JKD’S pulse reading stated in plain words, market seems all set for the vertical break out & may touch the 3950-4150 range even prior to the announcement of election results.Prudent people will call it IRRATIONAL EXUBERANCE, but we say one will be able to sell & buy larger volume than average at that level.  

OUTLOOK & STRATEGY:-
We recommend holding the long position entered at 3360 with the stop 3500.We advised to add more position near 3550 with the stop of 3500 for the target of 3800 minimum & may be 4100.

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[DISCLAIMER]
This Newsletter is an expression of Technical Analysis. It is NOT a market prediction. It is NOT an advisory or suggestion to buy or sell any types of securities. This is an educational and learning exercise, only to share our methods of technical analysis. Trading and Investing MUST always be done with prudent money management and use of stop losses. One Bad trade can ruin the trader, so always keep risk low. IF you do not agree with the statements mentioned herein, please close this document, do not proceed further, do not read the Newsletter.