Thursday, January 7, 2016

Nifty strong selloff: Power of 49 days Time Cycle!

Global Equity Markets has showed sharp fall in current week on the fears of slowdown in growth of China. Today was the 2nd trading session in this week where Shanghai Composite moved lower and closed down with 7% loss. This is the justification for the current selloff in Indian Equity Markets however based on Advanced technical concepts from the last week of December 2015 we were maintaining our cautious stand on Nifty due to slower nature of rally. Along with all this we also use Time cycles to time the market. Timing the market is very important from trading as well as investment perspective. Below we have shown part of research taken from “The Financial Waves Monthly Update” published on 5th January 2016.

Nifty daily chart – 49 days Topping Cycle and Bollinger Bands

(Part of research taken from “The Financial Waves Monthly Update”)

49 days Time cycle: We have seen bottoming Time cycles working very well but at times it is important to look at the Topping cycle as well. This 49 days Time cycle is shown on Nifty daily chart. We have been using this topping cycle for many years now and it has produced the desired outcome most of the time. As per this important tops are formed every 49 days and we can clearly see the top of August 2015 post which there was severe selloff which was also formed on this cycle day. After 3 months we have seen a fall of more than 150 points on Nifty on 4th January 2015. This indicates short term bearishness for few days.

Post forming to at 49 days Time cycles, Nifty did not look back and selloff is still ongoing. Now question arises still how much pain is left? Nifty is approaching towards the low of 7550 formed in early part of December 2015. What is next?

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