Friday, May 31, 2013

Nifty 140 points movement is here to stay!

The below excerpt is from "The Financial Waves" daily equity research report by Waves Strategy Advisors. For more information visit or write to
Today was the 5th time when markets have moved by 130 points in single day over past 15 days.
Movement of more than 100 points is not rare and 2008 downtrend had many such moves. However, sharp reversals in either direction is not seen quite often which has happened this time. Nevertheless we have been mentioning the crucial levels both on upside and downside which have been important to provide the trend confirmation.
Nifty 60 mins chart:
We have been showing not only 60 mins chart but also Nifty daily chart to provide what we think of the major trend for Indian markets.
In today’s morning report we mentioned that “Indian markets continue to move independent to the world equity markets and is also not moving in sync with USDINR. We predicted an up move in USDINR towards 57 levels when it broke above 54.50 to our currency readers and June expiry made a high of 56.68 in yesterday’s trading session (and touched 57 today)The movement in currency market continues to be a warning sign for Indian equity markets.
Over short term as shown on 60 mins chart, prices have been constantly failing to move above the blue trendline we have been mentioning over past few days.
In short, a move above 6160 will confirm expanding pattern under formation with final leg towards …….. before reversing back on downside or a move below ………. taking out previous up leg faster will carry bearish implication.
On 29th May 2013 in “The Financial Waves” we mentioned following This time Oil & Gas sector has been leading the way up whereas Banking sector is lagging. In the previous up move before the fall of 130 points it was IT sector that was leading & capital goods showed some strength and Banking stocks were the star performer during the uptrend from 5470 levels. We can clearly see sector rotation over very short period of time and only a few stocks or sectors participating each time. This for us is a major topping process unless we see overall participation from broader market.”
The predictably is going to increase as we expect a strong trending move to start in Indian equities. The sharp reversals over past few weeks looks to be ending and this time it will be a trending move in one direction and do not be surprised to see Nifty moving by 100 points as it is here to stay!
To view the important levels of Nifty along with 3 stocks on opportunity basis along with charts and the direction of trend subscribe to“The Financial Waves” and see it for yourself why we are saying a major move is about to start!!!
For more information visit or write to

Monday, May 27, 2013

Nifty – In a stealth bear market!!!

Nifty made a high of 6230 on 20th May 2013. The move up broke the levels of 2012 and 2013 and made high at the level which was last seen in November 2010.
Prices reversed on the same very day after making this high and have been down by more than 250 points from there. Even though Nifty and Sensex made new highs for the year the broader market did not show any participation. The below chart of NSE Midcap index clearly shows that this index retraced on upside by only 61.8% when Nifty touched new 2 year highs.
The below chart shows a classical inter-index divergence. Nifty touched new highs for the year butMidcap index failed to do that and turned down.
NSE Midcap and Nifty chart:

Why we say Indian equities are in a stealth bear market!
Please check the below Advance decline line chart. This chart clearly indicates that the Advance decline line has touched new lows even when the index has been moving higher. This clearly indicates that the majority of the stocks has been moving down against the direction of Nifty 50 index.
Chart courtesy:
In today’s morning report of “The Financial Waves” we mentioned following:
The overall breadth of the market deteriorated drastically on Thursday when markets fell by almost 130 points. The Advance decline ratio has fallen below its previous lows which was seen when the index was at 5477 levels. This continues to indicate that we are in a stealth bear market where the major Nifty index is not reflecting the true picture of the overall health of Indian equities. Barring a few heavy weights many of the stocks have moved below not only its 52 week’s lows but also are trading at life time lows. This does not necessarily mean that the stocks are cheap as it is a relative terminology and should not be used in absolute manner. A fall further in these stocks will make them even cheaper compared to current price. Case in point – Do not try to bargain hunt stocks that are falling unless we see significant reversal in price as nothing is cheap in stealth bear market!!!
This is not it. There is much more to the current market scenario. We have shown 4 charts for Nifty and Midcap index in today’s morning report that gives a clear view on the current market situation and what can be expected over near to medium term. Get access to these research reports by writing to us at Visit for more information.

Thursday, May 23, 2013

Nifty Elliott wave analysis - Is this start of next major trend?

By Waves Strategy Advisors, For more information on subscribing to equity research report write to or visit
Nifty has fallen by more than 100 points as of now with major blue chip stocks trading at day’s low and down by more than 3%. 
This has happened exactly at the time when the expectations in the market again started for upside targets of 6700++ levels. We have been constantly warning our readers of “The Financial Waves” equity research report of an impending top and we clearly stated that we will not buy into the euphoria and story for Nifty touching new life time highs. The below brief notes are picked up from our recent issues of Equity research and read it yourself to see why it is important to use objective tools like Elliott waves, Sentiments, Channels…
SBI and LT the 2 major index stocks are down by more than 6% and the argument can be made that it has fallen based on poor result earnings. I do not disagree to that but there are other stocks as well that has no news associated with them and are down by more than 6%. We continue to believe that the event can produce only short term spikes but the major trend eventually resumes. To trade profitably it is important not to rely on news since the outcome and reaction can be random but use other well defined objective techniques.
On 21st May morning report we mentioned: Nifty daily chart shows minor negative divergence on RSI indicator near 70 levels. There is already a lot of euphoria created for markets to reach life time highs and probably cross 6700 ++ levels on upside. We continue to adopt contrarian view looking at the significant lack of momentum and a very few indices or stocks participating in the current rally. As long as this continues we should continue to see a distribution formation andstocks moving out from strong hands to weak hands.
On 22nd May morning report we mentioned: Indian markets have been ensuring that as soon as strong bullish sentiments are created and maximum number of analysts start coming out with Nifty targets of more than 6700 levels prices reverses just to fade away the positive outlook. We are closely monitoring if the same happens even now. For us only a close above 6450 along with pick up in overall breadth of markets, participation from not just 1 or 2 sub-indices but a healthier inclusion of sectors will force us to come out with upside bullish levels. Till then we are looking at the current scenario as topping…. Aggressive selloff from current levels will indicate major top is in place trapping the bullish traders exactly at the wrong time yet again!
On 23rd May (today) morning report we mentioned: Nifty had a gap up opening of more than 20 points but prices failed to sustain the gap and selling accelerated during second half of the trading session. Prices made high of 6148 and closed below the support zone of 6100 – 6110 levels. This indicates that the near term trend continues to be negative.
………. this time the move up from 5970 to 6230 has been very steep unlike previous tops which were made on back of slowing momentum and more than 2 to 3 divergences. The top made at 6100 on January 29th 2013 had a very clear wedge pattern formation with 5 divergences on daily chart. The top made on 11th May 2013 at 6114 again had very similar setup, divergences, Fibonacci retracement levels and channel break  which helped us to capture the down move of almost 150 points which unfortunately did not realized into bigger downtrend and prices reversed. But this time the move up has broken above the levels of 2012 and 2013 and made high at the level which was last seen in November 2010. So this time we do not have the luxury of near term price data to have high conviction whether the top is in place. Secondly the previous pivot low is at 5970 levels which is almost 260 points below the top and as we said before it is ideal for prices to break this pivot low to confirm larger downtrend has started. However from trading perspective such far away levels can be challenging from Risk Reward perspective. During such scenario the best practice is to have less leverage and keep trailing short positions with prudent stoplossso that if short term trend gets converted into larger downtrend one can ride it on downside or if the trend reverses back on upside one can exit by locking in small profits or at breakeven levels and not losing anything. …..
We published an interim update as well to our readers that stated following: Nifty has retraced the complete up move from 5970 to 6230 in faster time. Apart from short term trend the major trend has also probably changed to down for the year. Avoid creating any fresh long positions and use trailing stop method for existing short positions to ride the trend!
We will publish the downside projections in tomorrow’s report with crucial risk management levels. Stay tuned!!!
For more information on subscribing to equity research report write to or visit

The Financial Waves Interim Update

The below Interim update was published by Waves Strategy Advisors to equity clients. For more information on daily research report - "The Financial Waves" visit or write to

The Financial Waves Interim Update

Bottom Line: Nifty has retraced the complete up move from 5970 to 6230 in faster time. Apart from short term trend the major trend has also probably changed to down for the year. Avoid creating any fresh long positions and use trailing stop method for existing short positions as per levels mentioned in report to ride the trend!

We will publish the downside projections in tomorrow’s report of "The Financial Waves" with crucial risk management levels. Stay tuned!!!

Wednesday, May 22, 2013

DLF: Power of Failed Pattern!!!

By Waves Strategy Advisors, For more information visit or write to
There are various patterns in technical analysis. To name a few - Head & Shoulder, Triangle, Wedge, Flag, Double tops, Double bottoms, etc.
Each of these patterns has their own characteristics and success ratio. Technical analysis is all about probability and statistics shows the probability of success and failure for these patterns. Traders normally bet only on the direction of breakout of these patterns on the assumption that the pattern will work and reach the target as per it. This is a perfect strategy but one should also note betting on a failed pattern has better success ratio than a valid pattern. Also prices travel violently in opposite direction if a pattern gets failed.
A classic example of such failed pattern is DLF. This stock gave a breakout of the triangle yesterday but quickly reversed and re-entered the pattern before reaching the pattern target. The below chart shows DLF movement as of now:
DLF 120 mins chart:

The above chart shows that DLF gave a breakout from the triangle pattern which carries aggressive pattern target of around 275 on upside. In Triangle the post pattern implication is that normally prices travel the widest part of the pattern from the breakout. The conservative target is projected on upside from the start of the up move rather than breakout. In the above chart even the conservative target is not achieved let alone the aggressive target. Prices then quickly re-entered the pattern and started moving violently on downside. This is a classic example of failed pattern and trading failed pattern is much better as the violent move happens in opposite direction of breakout which can be clearly seen above.
We believe that markets are on the path of natural evolution and one has to be dynamic enough to understand and accommodate that evolving nature. Failure to do that can result into serious errors on part of analysts and traders!
Do not get carried away with the overly optimistic views for Indian markets. Think objectively. To know more about the daily research advisory write to us at or call on +91 9920422202 / +91 22 28831358

Tuesday, May 21, 2013

Trading Nifty using trendlines and channels!!!

By Waves Strategy Advisors, For more information on daily research reports on Equity, Commodity and Currency visit or write to
Trendlines and Channels are one of the very basic concept of technical analysis but at the same time extremely crucial.
Any advanced technique cannot be used in isolation by ignoring these basic important concepts. The below chart of Nifty was published on 17th May 2013 in “The Financial Waves” daily research report. The report also showed different plausible scenarios:
Nifty weekly chart:
Wave Analysis:
The above chart clearly shows how well trendlines and channels have been working on Nifty. Prices have been taking resistances on the extended trendline since late November 2009. Thistrendline has been successful in halting the rally of January 2012, entire rally of Jan 2013 also halted just near this trendline resistance and prices are now again approaching towards the same line.
The entire fall of 2011 was also perfectly channelized and if you try drawing trendlines and channels on daily chart you will get amazing results that need little explanation.
Case in point: Advanced technical concepts should not be used at the cost of basic very important techniques that work very well in this complex trading environment.
The above article is picked from research report “The Financial Waves” of 17th May 2013 that shows how we are combining the basic techniques along with Advanced concepts like Elliott waves. For more information on subscribing to this daily research report that has Nifty and 3 different stocks write to

Friday, May 17, 2013

EURUSD: BROKE 1.3000 level… what is short term trend?

By Waves Strategy Advisors, Following is published in alternate day Global research report "The Global Waves". For more information visit or write to
EURUSD - The world’s most popular forex pair has been consolidating since last month between the range of 1.30-1.33.
 Euro-dollar exchange rate fell as the U.S. dollar took the upper hand or euro weakness has been explained by forex analyst to support the day movement.
On other hand, Elliott wave pattern on chart warned our clients before the fall and asked them to refrain from creating any fresh long position in this pair. Below we have shown EURUSD daily chart which is picked up from the Global research report – “The Global Waves”
EUR/USD Daily Chart:
Anticipated on 15th May 2013:
Happened till now:
Wave Analysis:
We have been accurate in capturing two days fall in EURUSD, prices breached the strong support of 1.300 levels decisively and made a low of 1.250 till now.
After one month sideways action between the range of 1.30-1.33, yesterday prices have closed below 1.300 for first time and formed a big bearish bar. As per wave perspective, prices have ended minute wave a of minor wave (b) near 1.32 and currently moving in the form of minute wave b.
There is more to the above analysis which is clearly discussed in our alternate day Global research report.
It's the crowd psychology of the forex traders that moves the markets, not the news. Don’t strike out on the next, near-term opportunity in EURUSD. Subscribe to the Global Research - The Global Waves which cover Bullions, International Currency pairs and DJIA. For more information write to us at or call us on +91 9920422202/+ 91 22 288313588 or visit

Monday, May 13, 2013

USDINR broke year long consolidation! Nifty concept of multiple Moving Averages!!!

Following article is published in morning daily research report "The Financial Waves" by Waves Strategy Advisors.    We have been constantly warning our subscribers about an upcoming downtrend in Nifty which materialized today. To know more on subscribing this daily research report visit or write to

Bottom Line: Nifty continues to protect its previous lows on closing basis. Momentum is reaching extreme levels! USDINR gave a strong breakout from yearlong pattern…

           USDINR Daily chart spot:

Wave Analysis:

USDINR has given a very important move on Friday. Prices have managed to close above the year long resistance line. If this breakout as shown on above chart is valid then we should expect a strong up move towards 57 levels or higher very quickly. Indian currency pair has been moving more independently over past few weeks irrespective of movement in equity markets. However such isolated movement cannot last for extended period of time and we can see increase in correlation again between INR and Equity. Also INR has been constantly protecting the lower end of the trendline despite of sharp up move in equity markets.

Nifty up move on Friday failed to provide any negative movement on USDINR which was also up by more than 1% in single day. If the breakout is genuine and INR is leading this time then equity should turn down to support the breakout on USDINR.

In short, it will be extremely interesting to observe if Nifty can continue the uptrend on back of depreciation in Indian Rupee which is now expected to reach near 57 levels. But we have our doubts and equity markets should now oblige sometime this week by turning down and giving negative price confirmation. But unless Nifty closes below important supports we will refrain from catching a top!

Nifty daily chart:

Nifty 60 mins chart:
Wave Analysis:

Nifty continued to move in uptrend and has so far not given any negative price confirmation. The individual parameters are reaching extreme levels and slowdown in momentum is very much evident from the momentum indicators on shorter time frames. However as we have been constantly mentioning price confirmation is one parameter which is still pending. A strong build up in momentum from current levels will change the parameters that are derivatives of price but such movements are rare events. Please understand that the probabilities are still high for prices to turn but there are always alternative scenarios to be embraced in case prices do not conform as expected.

Even on Friday and testing period on Saturday Nifty and Sensex both have managed to close above the previous day’s low and not yet closed below any of the levels we have mentioned in past week thereby maintaining the short term trend on upside. In the entire up move from 5470 to current levels not a single bar has closed below previous day’s low and this one simple technique of price has not given negative confirmation. A close below previous bar does not necessarily mean start of downtrend but does indicate halt in the uptrend and atleast sideways action if not negative. Break of important supports currently at 6045 and 6020 will indicate a move atleast towards 5850 levels over short term. We will have clear downside projection once we have negative price confirmation.

Mean reversion:We are showing the concept of Moving averages and difference of 2 moving average which has been giving very good indication on maturity of trend. As seen on daily chart 5 period Exponential and 20 period Exponential moving averages are very good from providing supports, resistance and direction of trend. Each day’s low has been taking support on 5 days MA and only a break below this which is currently at 6045 will indicate that the short term uptrend is in danger. The difference of Moving average helps us to understand if prices are due for mean reversion. Mean reversion is a statistical technique and it indicates prices eventually revert to its mean. We are using 20 days exponential MA as mean. The difference of 5 and 20 MA has reached an extreme level seen in entire year which again indicates a mean reversion should happen and 5 days MA along with prices should move back towards 20 days MA.

USDINR movement:USDINR chart shown above is now added as another negative parameter for equity markets and if our projection on USDINR towards 57 is correct which cannot happen without turn in equity markets on downside. As we always mention correlation in Currency & Equity markets are high during major turning points and the lead lag effect lasts only for few days. The magnitude of rise or fall varies but turning happens in close proximity.

RSI on hourly chart continues to show loss of momentum and negative divergence. However a strong move up above 6140 will remove this divergence and will also break the upward sloping resistance trendline opening further upside potential.

In short, we continue to re-iterate that many of the techniques are showing weakness in current uptrend but prices are yet to confirm. A move below 6045 will now be required as first sign of weakness and we will adopt alternative scenario on close above 6140 levels and /or if overall breadth & momentum of market starts improving from here on!

The above is published in morning daily research report "The Financial Waves" by Waves Strategy Advisors.    We have been constantly warning our subscribers about an upcoming downtrend in Nifty which materialized today. To know more on subscribing this daily research report visit or write to

Thursday, May 9, 2013

Sensex: Time Cycles, Elliott wave counts & Channels!

Sensex: Time Cycles, Elliott wave counts & Channels!

In today’s morning equity research report “The Financial Waves” by Waves Strategy Advisors (www.wavesstrategy.comwe have provided very important technical findings from basic technical techniques to advanced concepts all of which are indicating in one single direction.
Bottom Line: Sensex Time cycles, Price ROC, Channels and Fractals continue to suggest very important ………. formation under process…
Sensex Time Cycles: published complete chart in morning research report
Wave Analysis:
We are showing Sensex Daily chart with very important observations from medium term perspective.
Time Cycles: We have been intermittently showing ??? days’ Time Cycles every few months when prices approach near the cycle days. We have tweaked this cycle lately to accommodate the recent price action and this cycle has been working precisely not only to capture bottoms (shown before) but also …………. Infact the day of 29th January 2013 also conforms to this analysis. …..This cycle has worked to the point since 2011 but we will still give leeway of 10% which is ???
Fractal Nature: The current up move from the bottom of 18144 continue to exhibit a very similar pattern compared to …… 2012. Infact the strength of trend is also similar. As per this Fractal nature prices should do what it did before i.e. ………..
Price ROC: 12 days price ROC shows that this momentum indicator has turned down everytime it has come near 7. More than year of data is clearly showing that ROC value has never crossed above ??? level. Even this time ………..
Channels: We have mentioned before that each and every move on Nifty and Sensex has been perfectly channelized since the start of 2011. The entire rally of 2012 has also been within the channel. Prices are now very close to the upper end of the channel drawn since December 2011.
Elliott waves: Prices have retraced the entire up move wave 5 of C (shown in Nifty daily chart) in faster time thereby indicating that the major trend ……. Nifty 60 mins chart also shows the minor wave counts …….
Square of Price and Time: Sensex has so far shown 14 days of rally from the bottom of 18144 to the high of 20037 yesterday which means Sensex has moved by 1893 points. This indicates that on an average prices have been moving by 1893 / 14 = 135 points. Now, 135 is a very important geometric degree. The angle of 45,90,135,180,225, 270, 360 are all important degrees for Price Time combination. In addition Fibonacci ratios of Price / Time are also important. Currently the No. of points travelled / No. of days taken is 135.21which is exactly the important geometric degree.
We have shown such strong synchronization of techniques before during formation of bottom in January 2012, then during formation of top in January 2013 and now ……
There are enough technical evidences presented above that point to only 1 direction which is ………. probably by ………. but we still do not have ………
In short, we will now closely observe how prices move over next 3 days and if prices the only parameter pending gets in sync with other technical evidences else the alternative label will get into play….
There is more to the above technical parameters we have presented in today’s morning report. Such an astonishing synchronization of parameters cannot be coincidence. To know more aboutGeometric angles, Cycles, Elliott wave counts, Price ROC indicator, Channels and much more in one single report subscribe “The Financial Waves”. For more information visit or write to

Monday, May 6, 2013

Nifty major trend continues to be down but short term positivity plausible!

The following is published in daily research report "The Financial Waves" by Waves Strategy Advisors. For more information visit or write to

Bottom Line: Nifty failed to take out the low created immediately after policy announcement. This indicates one minor push up pending!

Nifty daily chart:

Nifty 60 mins chart:
Nifty 20 mins:
Wave Analysis:

We mentioned in previous update, “In 2013, markets have closed negative on positive news and over past 2 times prices closed down on day of repo rate cut by RBI. 12 months Bond yield currently stands at 7.46% which we use to judge possibility of rate cuts….In short, we continue to look at current market as topping with first negative confirmation below 5910 followed by 5850 levels. Today’s close will provide more clues to the near term direction of the market.”

RBI cut repo rate by 25 bps for 3rd time in this year and markets obliged by closing negative again on the day of monetary easing. As soon as the announcement was made Nifty made a low of 5930 but later recovered. There was high intraday volatility and after the announcement that there is little room for further monetary easing, market started rallying making day high at 6000 levels. This continues to indicate an up move on negative news and down move on positive news.

A very important observation on Friday is that even though Nifty closed down by 55 points on day of repo rate cut it has managed to protect the lows made at 5930 level immediately after the announcement. Prices turned volatile during the day but have constantly managed to protect 5930 level. A spike or panic low if not taken out during same day or next day it indicates supporting action and there is some potential left on upside.

A very close observation of wave structure as shown on 20 mins chart indicates that the move up from 5870 to 6020 took approximately 23 bars and prices have retraced only 61.8% of this up move in more than 23 bars. This clearly indicates that the minor trend is still positive and we can expect a push up towards 6040 levels.

Nifty 60 mins chart shows that prices are moving up in tipple corrective manner and prices are in minute wave c of 3rd correction. There is clear loss of momentum and there is negative divergence with RSI indicator. Prices have also now moved from steeper channel to a channel with lesser angle. This indicates a transition phase during a topping process.

Sentiments have started turning positive exactly at wrong time with upside projection of 6300 to 6700 levels by many analysts and traders. This is exactly what has happened even before when markets were moving up in primary wave 5 before finally topping out near 6110. We look at this as negative sign from medium term perspective.

However over short term, Nifty daily chart shows that all the while from 5480 to recent high of 6020 prices have closed above the previous day’s low and have also managed to protect the important low at 5910 level mentioned in previous update indicating some more steam left on upside before turning down.

In short, failure of prices to start trending move on downside on day of policy announcement and protecting the lows at 5930 and 5910 our bias continues to be positive. However we are looking this move as topping and not as start of new leg on upside as long as close is below 6110 level. Next target zone for this up move is anywhere near 6040 to 6070 levels. A move below 5910 will provide first negative confirmation that down move towards 5640 has started.

To get view on stocks on daily basis subscribe to the daily equity research report. For more information visit or write to

Friday, May 3, 2013

RBI Monetary policy - Impact on Banking Stocks!

By Waves Strategy Advisors, For more information on daily research report visit or write to
RBI cuts repo rate on 3rd May 2013 by 25 bps which was in line with many of the economist and market experts but does monetary policy drive stock prices?
In morning research update sent to our clients we mentioned the following, “In 2013, markets have closed negative on positive news and over past 2 times prices closed down on day of repo rate cut by RBI. 12 months Bond yield currently stands at 7.46% which we use to judge possibility of rate cuts. This yield indicates a possibility of 25 bps cut in repo rate at maximum and also a probability of no repo rate cut. In previous policy meeting a very important top was made at 6110 on policy day and ……..”
We continue to believe that events do not drive prices of stocks and result only in short term spikes and eventually the original trend resumes. The below article gives overview about Banking stock SBI irrespective of the monetary policy announcement -
SBI 120 mins chart:
Waves Analysis:
As shown on 120 mins chart, currently prices are at crucial juncture as it is quoting at 61.8%retracement of the previous down move (2550-1970). A move below 2225 will infuse selling pressure which can drag prices lower till ….. which is 61.8% retracement of the previous up move (1970-2360). However, a move above ………..
In published report, we have shown daily chart of SBI along with explanation to give the overall trend outlook in addition to short term 120 mins chart.
As per wave theory, prices completed wave (A) in the form of double zigzag pattern at 1970 and it is currently moving higher in the form of wave …..
In short, prices are currently at important juncture. A move below 2225 will confirm a short term top is in place whereas a close above ……… will open more upside possibility.
The above chart and explanation clearly indicates that the stock has moved exactly as per its trend irrespective of the monetary announcement. Prices are currently quoting at 2230 exactly at the support shown on the chart above. A closing will provide more clues on the overall trend for this banking heavy weight. 
Do not trade based on partial information but trade objectively and know crucial risk management levels. “The Financial Waves” daily equity research report gives holistic view on Nifty and different stocks.
By Waves Strategy Advisors, For more information on daily research report visit or write to