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                                                                WILL NIFTY CROSS 5500 ?

      Last week nifty opened at 5392.70 & went down to register the low of the week at 5353.60.It then rose to mark the high at 5477.50 & finally closed the  week at 5449.10.Thus it gained 45.20 points over the previous week which is 0.9%.

RETROSPECT: - Book profit on all longs & remain on side lined till the break out confirmed on either side.

SENTIMENTS: - Last week's positive sentiment was boosted by the surge in DOW,BASE METAL & EURO.Largely earning season has not given major surprises.However Tuesday's RBI CREDIT POLICY & inability to cross 5500 have been ablr to keep check on any euphoria.

ELLIOT WAVE THEORY: - Last week on a half day chart we had given the two probabilities of wave counts in green(bullish) & red (bearish) colors. The price action of last week has clearly negated the bearish wave count & gone in favor of bullish wave count. However even with the new 52 week high, is falling short of the required clean sweep bull market as it is dithering in & around the 2-4 trend line denoting waning momentum.  The upside momentum has failed to develop &  would not develop even if market makes one more high above 5477.50 in coming week. The lower degree 2-4 trend line in purple color is below the larger degree 2-4 trend line in blue color. Ideally reverse would have been case implying imminent trend reversal. The violation of price below purple trend line will be confirmation of the top. This is the red flag caution for  bulls  as it will be terminating a larger pattern of a DIAGONAL TRINGLE on upside. In turn this DIAGONAL TRIANGLE is TERMINAL PATTERN of still larger degree five wave pattern which commenced from 6th MARCH 2009.We have shown this DIAGONAL TRIAGLE in daily chart & larger FIVE PATTERN in weekly chart below.

A BREACH BELOW THE LEVEL OF 5360 WILL BE THE FIRST SIGN OF TOP BEING FORMED & BREACH BELOW 5210 WILL BE THE CONFIRMATION OF THE TOP FORMATION AS WELL AS DOWNWARD COMMENCEMENT OF THE WAVES.THIS WILL BE CORRECTING THE RISING WAVE OF 2925 POINTS SPANING OVER 16 MONTHS.THIS IS THE INDICATION OF THE MAGNITUDE & DURATION OF THE CORRECTION LIKELY TO SET IN.HENCE WE ADVISE TO LIQUIDATE ALL LONG POSITIONS UNLESS THE SPECIFIC STOCK  DISTINCTLY DISPLAY THE BULLISH PATTERN.

JAPANESE CANDLESTICK:- Last week's shooting star is negated by the small white body candle.However this does not establish the bullish market but just the sideways movements.

CHART PATTERN:-  The rising wedge pattern in the weekly chart is still valid & break out will be confirmed on breach of 4900.

OSCILLATORS READING:-  The daily RSI,STOCHASTIC & MACD has  turned up & indicates the short term  bullish atleast.The weekly RSI,STOCHASTIC & MACD  have remained the neutral mode & may turn up if nifty moves up with vigour.

SECTOR ANALYSIS:-  This week we are analysing the METAL sector.It has given the stupendos rise since March 2009 & formed the top of 18736 in the month of APRIL 2010 & then reacted to 13827 to form the bottom on 8th june 2010.It has since been rising & formed the INVERTED FLAG which is in its terminal stages.We see soon the third leg of decline to commence which should take it to 11000 or lower.

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 5425 for downside  & follow the break out. Ideally market is preparing for big break out & be prepared for it. BEWARE OF TRAP OF FALSE BREAK OUT ABOVE 5480.