Monday, October 26, 2009

A breakdown: Sensex, Hindalco, Suzlon, Maruti!


Our preferred view on Sensex is down!
More negative confirmation will be obtained on a move below 16600
It is plausible to count move up in Hindalco to be complete in a Z wave
Prices broke below mid channel line support
We do not rule out the possibility of prices retesting the highs of 144.50 but a break below 132 will increase our negative bias
USD/JPY prices rallied more than 3 percent in less than 3 days, a sign of Dollar strength
One can initiate short position on Hindalco only once it breaks below 130 levels
Suzlon - A strong breakdown! This indicates more downside possible

Maruti 29 day Cyclicality and Left translation suggests further weakness to come in the stock. We expect a trendline break!

Thursday, October 22, 2009

Negative bias on Sensex but minor positive on Hindalco!


Sensex has followed exactly the paths that we have shown (blue line) since last few weeks
Prices today decisively closed below the trendline connecting March lows
This can be a start of a bigger correction as wave count also looks complete
A move below 16600 will confirm that we are in for a major correction atleast till our target zone (as shown)
One can initiate a short positions now with a stop loss at wave (5 ) high, Risk reward ratio looks quite appealing!

We are expecting a final wave Z up in Hindalco
We have already completed 5 waves of wave Z and I expect this to be a 7 wave move
A small minor retracement was expected which happened today and now a final up thrust near 150 levels is where this entire rally since March shall end
Copper & Gold has also given an upward breakout out of triangle. So the final rally shall end soon in commodities now
Hindalco is a stock within Sensex and we have negative view for Sensex but minor positive view for Hindalco
We sometimes have to look stock movements independently irrespective of its correlation or Beta with index
After all Beta is also not a perfect measurement of risk as we need to consider times when deviations happen in either direction and it is just an average of large sample which gives us 1 single value
Also main reason for tracking Hindalco so closely is -- lately it is acting as a good proxy for tracking commodities: metals and this is the space which we expect to lead the fall globally !

Friday, October 16, 2009

Nearing the end - Rally since last Oct 08'


We mentioned in our previous blog that "we are expecting wave 5 of 5 to rally atleast till previous highs - 17200" and we also mentioned in September 09 blog probable target for Sensex near 17450 levels.
Sensex made a high of 17350, falling only a 100 points short of our target shown in September
Prices can now turn anytime soon but a short position shall be initiated only on break of the trendline shown from March lows


Prices have rallied so far in a 3 wave up and are showing signs of exhaustion but we cannot rule out the possibility of rally near 140 - 145 levels
We do not have any preferred wave count as of now
A short position can be initiated if prices break below 126!
We are also keeping a close watch on US dollar index (DXY) and Copper
Bottom and top picking is something I leave to most experienced traders but we shall obtain confirmation from DXY (Dollar index shall bottom out) as Hindalco starts cracking down!
DXY impulsive move above 76.50 - 77 is what we want to see which will induce weakness in global commodities and in turn in Hindalco

Sunday, October 11, 2009

Sensex: Time cycles. Gann and Target zone, Hindalco: Probable path


Sensex is showing a very weak structure. We are expecting wave 5 of 5 to rally atleast till previous highs - 17200 but there is an increasing possibility of it being over 2 days back
We gave in our September 09 blog probable target for Sensex near 17450 levels. Sensex made a high of 17195 this week.
Prices are at kissing level from the trendline connecting March lows. If prices have to rally in 5th wave it has to be now else we might see an increasing downward pressure.
Global markets rally, Better than expected Infosys results and Reliance Ind declaration of Bonus issue failed to lift the spirit of the market. This is a warning sign!
A fall from here will also represent an important break of "Gann angle"
Time cycles (shown as vertical blue line) also suggest we are in danger zone!
We have shown Target Zone for Sensex and will evaluate this further based on price behaviour next week. We should still wait for confirmation before pulling the "short trigger" on Sensex.


In our previous blog we stated move down in Hindalco as a 3 wave move but a close observation on intraday charts reveal an impulsive 5 wave structure down. We will keep this as a preferred scenario for now and wait for further developments. If prices rallies from here till upper end of the channel i.e. near previous highs of 140 then we need to adopt alternate count shown in previous blog.
Wave 2 is now in zone of wave4 of one lesser degree of previous wave1. An ideal place for wave 3 to start!
Also we have shown probable path for next few weeks for target of 101. Prices should turn down now if it has to follow our probable path. We will evaluate the validity of this path as wave structure develops next week.

Thursday, October 8, 2009

Sensex: 5th of 5th rally!


Sensex behaved exactly how we predicted a few days back.
We have completed wave 4 and a small push up in form of minor wave 5th of 5th should start now and end near previous high!

Hindalco reached very close to our first target and formed a low at 116.70 from 126 the very next day of our previous blog.
We were expecting an impulse move down but we did show, in previous chart, the possibility of a 3 wave / a-b-c correction.
There are couple of possible scenarios now - may develop into a complex correction or rally to previous high in form of wave Z.
Lets wait and watch for pattern to become clearer.

Sunday, October 4, 2009

Hindalco: A perfect setup!


Wave (3) of final wave [5] looks to be over. We are now expecting wave [4] to start and a very small wave (5) of [5].
The best of the rally of final wave [5] is behind us and we expect a correction now!
As we stated in our previous blog, any long positions shall be immediately covered as this market will not give much clues when it turn.

We are measuring the pulse of Hindalco pretty accurately!
It looks like a perfect setup to go short on this stock as wave 2 / b is over and wave 3 / c of minor degree shall start now.
Initial target is 115 and then to 101. We will evaluate further path after this target is achieved.
The up move correction since March looks complete and we are expecting this as a strong down impulse move!