NIFTY IN A PERIOD OF CONSOLIDATION FOR THE NEXT UP MOVE

Last week market opened at 4238.10 & went down to 4092.25 to mark the low of the week.It then continued to rise to register the high of week at 4488.05 & finally closed the week at 4448.95.Thus it gained more than 210 points during the week over previous week’s closing.This is the gain of over 5%.

RETROSPECT: - 
We had been recommending to hold on long positions in the market from beginning of May. The upburst in markets from the election results has given huge positive returns to the existing long positions.Last month was the only second month in the history of exchange where the monthly gains were over 800 points.The first such gain was seen only during the Oct 2007.

SENTIMENTS: -
The election uncertainity has just vanished and now the market participants are looking forward to next developments.The rise had been too good & swift to believe.In effect everyone has been left out to participate in this move.The mind set of participants have not yet digested the current higher level & heart in heart they crave that market will come down & they would be able to board the bull-train.Usually such emotions & cautions self feed the bull-run.However there had been excessive bullish dose provided by the newly sworn in ministers.This is quite euphoric & should have lead to correction in normal circumstances.However we see more of time wise correction due to institutional apetite.
 


ELLIOT WAVE THEORY: - 
In the last many issues we were attempting to decipher the wave count from 27th Oct,2008 low of 2252.75.The waves unfolding from there can either be a flat or a new impulsive move.With this in mind,we have labeled the 5th Nov,2008 top  of 3240.55 as either wave [1] of impulse or the wave {A} of flat correction.Similarly the 6th March,2009 low  of 2539.45,has been labeled as wave [2] or wave {B}of flat.The wave unveiling from there onwards is similarly either wave [3] or wave {C} of flat.It may be pertinent to note that in either case the internal wave structure from 2539.45 should terminate with the five waves witin it. We are still retaining the flat wave count in low probability as later on the whole rise may turn out to be larger degree B wave.However we see this to be only as less than 10% probable & 90% it is the impulse structure.

As far as the short term internal wave counts are concerned we see some corrective consolidation with upwardly tilted bias is seen within the 4600-4300 range.However we will keep our mind open for upward burst due to early euphoric wide ranging reforms policy announcements & it may cause many fund managers berserk with shopping frenzy.

JAPANESE CANDLESTICK:-
We have already mentioned earlier that the May month candle was largest upward white candle in the life of naughty nifty.It may be pertinent to note that since March beginning there are in all 12 weekly candles & except one, all are white candles.
 

CHART PATTERN:-
Except larger rectangles there are no other specific pattern at the moment.

PULSE-READING:-  JKD soul voice says that we will not be surprised if the nifty knocks the door of 6000 or above just prior to the announcement of budget.You feel we have gone crazy.Fine but just think at the terminal end of bull market with the base of 5000 it had formed the monthly candle of 976 points.Here the inception of bull run commences with the monthly candle of 1031 points at the base of 3500.Any way we would repeat the soul voice has no logic system theory or principles.

OUTLOOK & STRATEGY:-
We recommend buying at any dip near 4300 with the stop placed at 4090.

________________________________________________________________________________

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.