Friday, January 29, 2010

Tide has Turned! Probable Path...


Happened: As we said in our previous blog "Peak is here" since then market has capitulated
The best sector now to go short - is the "METALS". BSE Metal index gave best returns in the entire bull run from March 09 till Dec 09. This is the sector which should again outperform market but on the downside
Dollar index (DXY) has started the third leg of rally and this is the best period for going short on Commodities
We expect prices to reach our first target of 15500 - a 23.6% retracement of entire rally, also a Fibonacci value which Sensex has given lot of respect on previous occasions
Time cycles suggest some significant bounce back in last week of Feb - early March
Wave counts on 30 min chart do suggest a small upward correction soon but as I have always said the best strategy during such strong trends is to use Trailing stop loss method, as wave counts can be tricky and can move in extensions
Expect volatility to be very high and please be aware you might get whipsawed and stop loss might get triggered even if you are placed in right direction of trend. After that when market starts going in your direction again possibility is you will end up making a wrong impulsive trade. These are the times when emotions are high and markets enjoy testing it. In this probability game you will be rewarded only if you follow the rules and adhere to it. Bottom-line: "Avoid impulsive trades, Do not reinitiate trades without thorough analysis again after Stop Loss being triggered"

Friday, January 22, 2010

Time Cycles, Gann suggest: PEAK is HERE!


Today's fall in Sensex carry some very important messages:
A very important Gann angle - 45 degrees is decisively broken. As per Gann a break in this angle can result in some serious correction ahead!
Trend line from March lows connecting December low broken
RSI moved below 50 levels
Time cycles suggest an ideal time for a peak to occur. Prices will no longer be right translated and is subtly shifting to left translation indicating some serious fall very soon
We mentioned in our previous blog that a move up cannot be ruled out but it was with extreme caution as multiple wave counts of ending diagonal were possible, but it did indicate we were in final of the final waves with a top very soon. Ending diagonal is probably complete
Next 2 days will be very crucial and will confirm if we are at the gates of a deep fall !!!

Tuesday, January 19, 2010

Sloppy Action Continues!


As we pointed out in our previous blogs (since past few weeks) this final primary degree wave [5] rally is developing into a corrective pattern i.e. an ending diagonal which is the only valid wave structure in an impulse wave up having characteristics of corrective wave.
The wave count lately has become extremely difficult as there are more than one equally probable scenarios in which this ending diagonal formation can be counted
So we refrain ourselves from labeling the internal wave counts of wave [5] unless a more clearer wave structure develops but we still expect a rally till 18750 (only with extreme caution) to happen unless prices break below 17000 levels, which will indicate the party is over!

Monday, January 11, 2010

A sloppy action!


Sensex have been showing sloppy movement since past 1 week
The drift downwards looks very much corrective and it looks to be forming a base for rally in form of wave c of (3) of ending diagonal
We are expecting a trending move upward to start very soon maybe in a day or 2
Caution: Book partial profits at every level of rise as we are in final leg of rally which started in October 07 and the upside potential is limited from here. We do not expect a move above 18750!

Monday, January 4, 2010

Will the party continue in New Year!

Sensex made 52 week high and closed at the highest level on last trading day of the year 2009 at 17464!
We expect this final 5th wave to develop into form of an ending diagonal
If our interpretation is correct and prices are in wave C of (3) then prices shall rally now rather quickly! A further weakness from here will warrant for adoption of an alternative count