NIFTY ENTERS CORRECTION MODE:SHALLOW,DEEP OR MODERATE ?

      Last week nifty opened at 6144.70 &  then went up to 6223.40 to register the high of the week. It then declined  rel to mark the low at 6067.00 & finally closed the  week at 6103.45.Thus it lost 39.95 points over the previous week which is 0.65%  approximately.

RETROSPECT: - We  are long on nifty as well as market from 5660 & holding the position with the stop of 5920 for the target of 6200.With the target being attained we have liquidated the long position to take the profit off the table. Now we are hunting for suitable entry in the market.

SENTIMENTS: - There is sea change in sentiments with the cross of 6000 & massive inflow of FII, sentiments is just not positive but turning into party time.We still would not like to call the inception of frenzy however there is very thin line of demarkation.Participants have started hunting for beaten down,oversold sectors & stocks which are turning up with market to catch the lost ground.This is leading the bull fire to more wide spread sectors & stocks.However sentiments has turned to take the profit off the table due to proximity of 6300,Coal india IPO &inception of earning seasons for the Sept end quarter.

ELLIOT WAVE THEORY: -   At 6223.45, nifty has terminated a wave pattern. The inception of this wave pattern can be taken from two bottoms 4786.45 (25th May,2010) & 5348.90 (31st Aug,2010).In the daily chart below we have shown three probable wave counts in dark green, blue & maroon colors. Essentially the blue & maroon colors are same with the difference of wave 2 being either zigzag or flat correction. Currently unveiling corrective wave's characteristics will largely determine which is the most likely wave structure. A very sharp ,swift & deep correction to 5500 will confirm the dark green color wave count which we put as 20% probability. A moderately deep correction to 5785 will confirm the blue color wave counts. We have assigned this as 35% probability. Pricewise a shallow correction to 5950 will confirm the maroon color wave count. Time wise this correction may be quite elaborate. We have assigned this as 45% probability.

On the larger time frame the weekly chart we have shown  the most probable wave count. However to elaborate on this we need some more unfolding of price data  with which hopefully we should be able to throw better light on course of the action in the market.

JAPANESE CANDLESTICK:- Last  week it formed the small bodied black candle after the consecutive lonf five weekly candles denotes pause or consolidation after the stupendous rise.We are expecting some corrective consolidation patterns over the next 2-3 weeks before resuming the uptrend again.

CHART PATTERN:-  The upwardly tilted RECTANGLE FORMATION has been breached on upside.This is the 10-12 months consolidation within 700-800 points.The break out from such pattern has far reaching consequences on the next move.The present run up has met all the conditions of genuine break out.

OSCILLATORS READING:-  The daily RSI & MACD has  reached over bought levels  & indicates the short term  bullish to continue.The weekly RSI,STOCHASTIC & MACD  have also turned positive indicating further gains in the store.

SECTOR ANALYSIS:-  This week we are analysing the healthcare sector.It has  outperformed the nifty by 50% from the Oct, 2008.In fact it risen from the 2500 to 6300 level.Howvwever the weekly chart still shows that it can gain another 50% above & over 6300 level to 9500 in next 10 to 12 months.

STOCK RECOMMENDATIONS:-  

(1)BUY CIPLA AT 340 WITH THE STOP OF 335 FOR THE TARGET OF 355.

(2)BUY DIVISLAB AT 732 WITH THE STOP OF 720 FOR THE TARGET OF 770 OR ABOVE.

(3)BUY PRAJIND AT 80.65 WITH THE STOP OF 79.00 FOR THE TARGET OF 84.00.

(4)SELL ACC AT 1030 WITH THE STOP OF 1045 FOR THE TARGET OF 980..

(5)SELL IOC  AT 424 WITH THE STOP OF THE 438 FOR THE TARGET OF 380.

PULSE-READING:-  JKD SOUL VOICE SAYS  TWO THINGS

   (1) KEEP YOUR RATIONALITY ASIDE... JOIN THE MADNESS OF BUYING FRENZY... MOOD IS JUST SPREADING & THERE WILL BE ENOUGH PRICE APPRECIATION & TIME TO GET OUT BEFORE THE HANG OVER VANISHES FOR LOGIC ,RATIONALITY  & SANITY TO PREVAIL AGAIN.

(2)BITE THAT MUCH WHAT YOU CAN CHEW WITH HAJMOLA (STOPLOSS) ELSE YOU WILL HAVE TO VOMMIT.

SAMAJHANEWALE SAMAJH GAYE, NA SAMJHE WO ANARI HAI.

OUTLOOK & STRATEGY:-  Keep strict watch on the 5940 for any long position. FRENZY HAS JUST BEGAN JOIN THE PARTY & ENJOY IT.