HAS NIFTY COMMENCED THE VERTICAL DECLINE? 

Last week market opened at 5117.30 & went up to 5156.70 to mark the high of the week & went down to 4979.05 to register the low of the week.Finally closed the week at 4987.70.Thus it lost 129.60 points during the week over previous week’s closing.This is approximately 2.6% erosion in value. 

RETROSPECT: - We are holding the short nifty of 5145 with the stop of 5165 & continuing so.

SENTIMENTS: - Market sentiment has been quite confused & apathy towards the trading was pervading all over partly also due to CHRISMAS HOLIDAYS. 

ELLIOT WAVE THEORY: - The stupendous surge from 3918.75 has compelled us to conclude that the new wave has started unfolding.Therefore now we will concentrate our efforts to analyze the wave count from the low 3918.75 of 13th July 2009.At 4731.45 top on 4th Aug,2009 it has completed wave 1 as five wave upside sequence.Similarly it has completed a flat pattern at 4353.45 on 19th Aug,2009 & in accordance with the previous labelling it will be labelled as wave 2 .From 4353.45 it has unfolded the third leg of the rise till 5181.95 on 20th Oct,2009.Accordingly we have labelled this as wave 3 of the zizgzag.

From the top of the 5181.95 it has declined to 4538.50 in 10 trading sessions.Since last week it nominally crossed the top of 5181.95 by registering the high of 5182.55 on last Friday, the decline from 5181.95 to 4538.50 should be considered as 3 wave structure.Now we are left with only two probabilities.First at 5182.55 the five wave structure from 4538.50 is complete & it should be retraced it completely in lesser time than what it took to form.Augmenting this logic it may have completed the five wave from 3918.75 &2539.40.Declines can be ferocious in increasing order.Second it is forming flat correction of wave 4 & at 5182.55 it was just the b wave.In this case decline will be quite normal & may reach around 4550.Both the probabilities are shown in black & blue color respectively. 

JAPANESE CANDLESTICK:- In the daily as well as weekly chart it has formed the distorted type of EVENING STAR.It is a reliable reversal pattern & further confirmation is awaited in coming week.

CHART PATTERN:- There is a double top formation at 5180 in very nascent stage & will emerge only after good decline below 4800 & will get confirmed on breach of 4538. 

PULSE-READING:- JKD  soul voice says that smart players have fleed leaving the market in weaker hands & we may see sooner than later the stampeding of bulls. 

OUTLOOK & STRATEGY:- Continue to hold the short nifty with the stop of 5165 for the initial target of 4800 & lower. 

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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.