IS 5477.50 IS TOP OF THE 2010? YES IT IS.

      Last week nifty opened at 5446.55. & went up to register the high of the week at 5466.25.It then decline to mark the low at 5349.20 & finally closed the  week at 5367.60.Thus it lost 81.50 points over the previous week which is 1.55%.

RETROSPECT: - Shorts entered on breach of 5425 are in money & we are looking to add further on pull back.

SENTIMENTS: - Last week RBI policy did not gave any jolt & other factors remained the same.However the two factors started emerging on the negative side.First the inability to cross 5500 & breach of 5400 on downside.Secondly the earning season blinking amber on bottom lime not keeping pace with the topline growth (exceptions axis bank,tcs & bajaj auto)

ELLIOT WAVE THEORY: - Last week we reported that the breach of purple color trend line by price on downside will be the first confirmation of the top formation. In other words simply stated it has completed the five wave sequence from the 5210 to 5477.50.This five wave sequence is itself the 5th wave of the larger degree five wave commencing from the 4786.45.The 2-4 trend line in blue color of this larger degree wave has  already  breached on downside confirming the larger degree termination of wave at 5477.50.The final confirmation of this requires that the rise from 5210-5477.50 should be completely retrace in lesser time than it took to form. This rise had taken 17 working sessions & decline has consumed so far the 5 working days. Ideally such larger degree top is accompanied by much sharper sell off .In other words decline should take much less than 17 days & we are estimating that it should retest the 5210 during the coming week any time. In such case it is the red flag caution for  bulls  as it will be terminating a  still 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 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 it has formed the BEARISH ENGULFING LINE.It is a reliable reversal pattern.We are awaiting the follow up action in the coming week.

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 down & indicates the short term  bearish atleast.The weekly RSI,STOCHASTIC & MACD  have remained the neutral mode & may turn down if nifty moves down with vigour.

SECTOR ANALYSIS:-  This week we are analysing the SOFTWARE sector.It has given the stupendos rise since March 2009.However for the first time it is forming the lower top lower bottom formation.We recommend selling short at any rally with the stop of the 6300 for the atrget 5800.

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 5350 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 5420.