HAS THE MARKET TOPPED OUT AT 5487.15?

      Last week nifty opened at 5369.55. & went down to register the low of the week at 5351.30.It then rose to mark the high at 5487.15 & finally closed the  week at 5439.25.Thus it gained 71.65 points over the previous week which is 1.40%.

RETROSPECT: - Shorts entered on breach of 5425 have narrowly escaped the stop of 5500 & continue to maintain the negative bias.

SENTIMENTS: - There is no perceptible change in sentiments over the previous week.However the earning season's short fall to the expectations have began readjusting in price level.

ELLIOT WAVE THEORY: -   Since nifty made a nominal high above 5477.50 at 5487.15,we have to just redraw the trend line & wave labeling with just minor changes while keeping the soul of the logic unaltered. 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 5487.15.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 5487.15.The final confirmation of this requires that the rise from 5210-5487.15 should be completely retrace in lesser time than it took to form. This rise had taken 26 working sessions & decline has consumed so far the 1 working days. Ideally such larger degree top is accompanied by much sharper sell off .In other words decline should take much less than 26 days & we are estimating that it should retest the 5350 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.

JAPANESE CANDLESTICK:- Last week'S BEARISH ENGULFING LINE was not confirmed by the red candle  & it just gave small body candle which neither bullish nor bearish implications of any larger degree.

CHART PATTERN:-  The rising wedge pattern in the weekly chart is still valid & break out will be confirmed on breach of 4900.It may be pertinent to note that in daily also there is wedge formation & may break during the week.

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 METAL sector.It has fallen sharply during the months of APRIL & MAY from 18700-13800.It then corrected on upside for the months of June & July to 15750. It has since then declining & we see it first stop at 13100 ,a decline of 12-15%.

STOCK RECOMMENDATIONS:-  

(1)SELL BHARTIARTL AT 325 WITH THE STOP 330 FOR THE TARGET OF 307.

(2)SELL TATASTEEL AT 538 WITH THE STOP 550 FOR THE TARGET OF 505.

(3)SELL TCS  AT 875 WITH THE STOP OF 886 FOR THE TARGET OF 835.

(4)SELL MARUTI AT 1230 WITH THE STOP OF 1240 FOR THE TARGET OF 1140.

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 5487.15.