GLOBAL CLUES DEPRESSING THE LOCAL BOURSES?

      Last week nifty opened at 5271.10 & went up to register the high of the week at 5339.45.It then declined to mark the low at 5210.00 & finally closed the  week at 5237.10.Thus it lost 31.95 points over the previous week which is 0.63%.

RETROSPECT: - Our shift to under exposure or no exposure is probably the call of the market conditions.

SENTIMENTS: - Global clues on the negative side surfacing again with the DJIA many indices have formed new low of 2010.Crude & base metals slip to bearish trend with lower top & lower bottom formations. FII buying had been  hide & seek.The conspicuous absence of conviction among participants for higher levels beyond 5500, is tilting the sentiments on the negative side.

ELLIOT WAVE THEORY: - In the chart below we have given two wave counts from the 25th May 2010 low of 4786.45.The bullish wave count is in the blue color & bearish wave count is in the red color. For the bullish wave count to be valid ,it should  not fall below 5147 & ideally to maintain its vigor reverse from the5210 or above. For the bearish wave count to be valid it should overlap 5147. At present we assign 55% probability to bullish wave count & balance 45% to bearish wave count.

JAPANESE CANDLESTICK:- Last week it has formed the SHOOTING pattern as shown in the chart.The week prior to last,it had formed the GRAVESTONE DOJI.It is a bearish pattern.However it need to be confirmed with the black candle in coming week or it should trade substantially below the GRAVESTONE DOJI  & SHOOTING STAR low to confirm.

CHART PATTERN:-  In the daily chart a bullish flag formation is  broken on the downside.This is bullish pattern failure & has bearish connotations.

OSCILLATORS READING:-  The daily RSI,STOCHASTIC & MACD has  turned down & indicates the short term  bearish atleast.The weekly RSI,STOCHASTIC & MACD  have remained the neutral mode.

SECTOR ANALYSIS:-  This week we are analysing the metal sector.It has formed the distinct lower top lower bottom formation to confirm the bearish trend.From the ELLIOT WAVE perspective it has formed the wave 1,2,3 & 4 under the five wave pattern sequence on downside.We have estimated the targets of the fifth wave at 12930 & 11340.The first target is 10% & second 20% below the current level.Expecting the minimum target one should book profit & enter at lower levels.

PULSE-READING:-  JKD SOUL VOICE SAYS THAT MARKET IS JUST RIPE TO EXHIBIT THE IRRATIONAL EXUBERANCE & RETAIL & NOVICE INVESTORS ARE ADVISED TO REFRAIN IN THIS MADNESS.

OUTLOOK & STRATEGY:-  Keep strict watch on the 5145 for downside & 5330 for upside & follow the break out. Ideally market is preparing for big break out & be prepared for it.