Bearish Implications VOID! AGAIN!

Anticipated: Sensex Probable path was shown on 08/09/2009 and was adopted as preferred count on blog with heading "Bearish Implications VOID!"

Happened: Sensex touched 17493 on 17/10/2009 and turned for a fall till 15500

On 8th of September 2009, we mentioned a heading "Bearish Implications VOID!" for first time when we turned bullish on Sensex and gave a probable path with a target of 17500! We actually mentioned on our blog "As per this count we have target for Sensex of 17500. Lets wait and watch!"

Happened: On 17th October 2009 Sensex actually made a high of 17493 and started a steep fall till 15330. Sensex missed the target I gave by 0.04%. Yes this is true. I was also shocked to see this when I was searching for my blog on Title "Bearish Implications VOID". This only proves that Humans are controlled by their subconscious mind and follow a natural rhythmic progression based on Fibonacci relationships.

Today again we are giving the same title "Bearish Implications VOID" as today's move is similar to one prior to 8th September 09. A recent fall or rather drift lower took a week but a rally covered almost entire week's fall in a day. So this forces me to adopt an alternate count.

I am expecting Sensex to reach a minimum target of 18750 and in a form of an ENDING DIAGONAL! (yes a 3 wave structure). Lets wait and watch!

ICICI Bank: Is this a start of new up trend??

Today's move was strong and indicates the down move was only a 3 wave structure and not 5 as we were expecting. Please cover all your short positions now! Next few days of price action will tell if this is indeed a start of a new trend up in form of final wave.

ICICI Bank: An appealing opprtunity! Sensex: Ready to Crack

Sensex

Banking and Realty sectors have already given a breakdown. Sensex is ready to crack
We are expecting a gap down opening for Sensex tomorrow and it should then move impulsively down
This time we are not expecting any bounce back as last few sessions. Let prices give a confirmation by closing below the trendline
Lets wait and watch!
ICICI Bank

Sell ICICI Bank with Stop loss of 885, First Target 700!
Prices shall now move down very fast in wave C

Are you looking for confirming evidences!

Sensex

Sensex since 2nd of December has not done much and is not trending in any direction
The global market rally / fall did not result in any major movement in the index
Human brains are conditioned to look at evidences that help us satisfy our positions and confirms we are placed in the right direction but please beware a breakout or breakdown is what will be obtained from only from price confirmation
Happened: A strong bounce back in US dollar. We have been mentioning since last few weeks of strong technical bounce back in US dollar and happened EURUSD fall from ~1.51 to 1.46 in just a week's time
This should result in global sell off across different assets but when will it happen only price confirmation will tell!
On balance volume indicator is drifting downwards indicating volumes on downside is little more than that on up side
But we still wait for "Price Confirmation" in downward direction. First confirmation on downside will be obtained below 16900 and later below 16500
So wait for prices to prove its direction and STOP looking at other evidences that provides an inner emotional satisfaction!

Too Much of Energy Consumed!!

Sensex

Sensex rally since 3rd of November looks more corrective than impulsive
The rally looks to have consumed too much of energy and is ready for exhaustion! It is like more and more fuel is consumed but the speed is constantly reducing
Look at MACD - momentum has lost considerable energy!
A break below 16500 will provide a good confirmation and this time we are expecting shorts to be richly rewarded
By trapping the bears again this time on Dubai news Mr. Market has succeeded turning even more number of bears into bulls who are the final participants in the rally before an intermediate down trend
A move above 17500 will warrant for an alternative count - 3rd of 5th wave to start and prices shall rally fast after that - A low probable scenario, in midst of weakening global commodity markets - Oil, Gold and strong US dollar

Inverted Chart

Inverted Chart: This is what we would like to see when the markets are ready to rally in upward direction but beware this is a mirror image -- indicating the opposite!

Dubai News or Sentiments??

Sensex

Dubai News or Sentiments??
Panic selloff in global markets including Gold, Oil, Copper - The news is Dubai may default on its debts. It is said 'Panic selloff in World markets is an over reaction but my understanding is: it is not the news that drives the market but the markets that create the news. As Mr. Prechter (founder of Elliott wave International) said, we are conditioned to view market behaving on laws of physics but it is the sentiment that drives the global market.
Such extreme Global reaction on Dubai news is something that is worrisome to me, indicating the rally since March this year, in some of the global markets, was on a very weak internal structure. The sentiments are changing tides very fast!
I am expecting a strong Dollar technical bounce back now from here for next few months before a major collapse leading to further extreme sell off in world equities and commodity markets
Is it a mere coincidence that we mentioned in our previous blog on 24th Nov "As long as prices do not cross the top of previous wave (5) i.e. 17493, we still hold bearish view with very appealing Risk / Reward ratio" well before the news came out!
Happened: On 26th prices brokedown out of corrective trend channel moving steeply in downward direction
We may have started a deep correction now and prices should fall well below previous bottom of 15330 made on 3rd of November.

A good opportunity!

Sensex is following a 4 month cycle. Prices bottomed just 5 days before the cycle lows, in form of Wave A
Prices have rallied steeply after that and even crossed 76.4% retracement of the late October fall
This steep rally was unexpected and was a surprise but we did mention in our previous blogs that prices are moving very fast, faster than we can think of.
When prices move fast in our direction for sometime and suddenly takes a "V" turn moving in opposite direction with same pace, lots of emotions creep in forcing people not to adhere to their "Risk Management" and "Stoplosses". This is precisely what Mr. Market wants -- proving maximum number of people wrong in either direction
Please adhere to strict risk management in times when markets are moving fast and not behaving exactly the way we want it to
As long as prices do not cross the top of previous wave (5) i.e. 17493, we still hold bearish view with very appealing Risk / Reward ratio
We will look at price movement and adapt an alternate count once the above said level stands broken. Till then maintain your short positions!

A corrective rally??

Sensex

The current rally in Sensex looks corrective in structure
This looks to be wave c of corrective wave B
Prices might resume its downtrend anytime soon!
A break below the red corrective channel will provide confirmation that major trend down has resumed
A short position can be initiated after the break of upward sloping trendline (near 16000) from 3rd November

Fractal Nature & A sucker rally!!!

Sensex: Fractals


Sensex: 5 mins

The first chart is a daily chart of Sensex and the below chart is a 5 min chart. The movement in Sensex yesterday (seen on 5 min chart) resembles a close pattern with that of movement on daily chart of Sensex from mid July till 22nd October (highlighted).

This is a classic example of markets exhibiting fractals at various time frames!

The fall after completion of pattern on daily chart was steep and we can expect the same now!

Becareful: Yesterday's rally looks to be a "sucker rally" in form of wave B. It can be very choppy but markets are moving very fast as we are constantly saying and wants to complete the minor upward correction as soon as possible to resume their downward journey.

We will review our negative bias if Sensex moves above 16450!

Happened: The Breakdown! An impulse down

Strategy to adopt:
Trailing stoploss methodology is an ideal strategy to follow now if you are well in the game! Indian Markets are rather moving very fast and can move faster than we think. Selling on targets might deprive you of some exorbitant returns which otherwise would be possible! Just think...
Sensex

The move down on Sensex is of impulsive structure indicating we are in for some major correction in coming weeks!
Regional rallies on 30th failed to reduce the pessimism - A sign of worry!
We have shown the Sensex target zone for first time on 11th October, before the meltdown and also warned, if you refer our previous blog on 4th October, "....any long positions shall be immediately covered as this market will not give much clues when it turn"
Hindalco

We showed probable path of Hindalco on 11th October, but we were little early. It is always better to be earlier than late!
We are expecting a meltdown in Hindalco prices soon in form of wave iii
Suzlon

Suzlon has broken down from triangle pattern of corrective Y.
Happened: We mentioned in our previous blog: "A strong breakdown...."
I will not be surprised to see this stock at previous low of March i.e. near 35 range!
Maruti

A clear H&S breakdown!
We mentioned a trendline break in Maruti before it happened
We showed an up arrow a few days before 29th October, indicating Maruti is following 29 days cycle and a temporary support possible. Prices rallied on exactly the same day. This shows how precisely prices can sometime follow cycles!

A breakdown: Sensex, Hindalco, Suzlon, Maruti!

Sensex

Explanation

Our preferred view on Sensex is down!
More negative confirmation will be obtained on a move below 16600

Hindalco

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

Suzlon - A strong breakdown! This indicates more downside possible

Maruti


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

Negative bias on Sensex but minor positive on Hindalco!

Sensex


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!
Hindalco

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 !

Nearing the end - Rally since last Oct 08'

Sensex

Explanation
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

Hindalco


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

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

Sensex

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.

Hindalco

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.

Sensex: 5th of 5th rally!

Sensex

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

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.

Hindalco: A perfect setup!

Sensex

Explanation
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.
Hindalco

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!

Sensex: Intermediate peak in early October?

Sensex

Explanation
Prices behaved in line with the pattern we showed a few weeks back but the magnitude of rally is not quite as expected in a 3rd wave.
There is an increasing possibility of this final rally developing into an "Ending Diagonal". Please do not initiate any long positions now as risk reward ratio is not in favor of bulls and the global markets are showing signs of acute weakness.
Last year in October Sensex formed a major bottom but "Time Cycles" suggest, we will form an intermediate top in early October this year.
Hindalco

One can initiate a short position on Hindalco as prices broke below mid channel line @127 (recommended in previous blog) but beware of the possibility of a minor bounce back till 130-132 levels since short term RSI is in extreme oversold condition. Any bounce should be a good opportunity to initiate short!
Copper moved impulsively down today to 267 levels confirming weakness in the commodity space
Targets for short term on Hindalco is 115 and then101. We will review if pattern changes

Sensex - The Final Rally! Hindalco peaked as forecasted!

Sensex


Explanation
Sensex is now in final 5th wave rally that started last October
Prices are moving exactly in line with our forecast which we presented, for first time, in our blog on 8th September
Our bias is still up for a target of 17500 but with caution!
Hindalco

Hindalco prices stalled after peaking at 139.90 last week
Based on "Time Cycles" we predicted prices to peak sometime last week and it happened!
One can initiate a short position once the mid channel line at 127 is broken
We had an upward bias on Sensex and pattern completion for Hindalco. This is an excellent example that indicates how sometimes the "correlation is broken" and prices follow their independent Elliott paths

Hindalco - Targets Achived! , Yes Bank - Good opportunity!!

Sensex

Explanation
Let us stick with this alternate count which we have presented since last week. Markets are behaving as expected in this pattern. We will review if lower trendline is broken
Sensex have given a decent rally in last 2 days
I am not here to catch a top in this rally and I would suggest you not to fall in that trap. Only if prices break below trendline we can evaluate alternative wave pattern

Hindalco

TARGETS ACHIEVED!
Hindalco achieved target of 131 as stated in our previous blog i.e. 14% return in just 1 week!!!
Please book your profits for the remaining positions at this level. More aggressive traders can use trailing stop loss method (SL @ 125)
We are keeping close watch on this stock to see when reversal might occur
Time cycles suggest we are nearby forming a peak this week

Yes Bank

Recommended by Vishal Dalvi
Yes Bank - Good opportunity!
Yes Bank is forming a very appealing pattern - an ending diagonal
It provides an amazing opportunity to go short on this stock but "only" after we get a price confirmation that the pattern is over
A short position can be initiated if prices fall below 174 with a target of 130 - 135
We can see a throwover today and prices shall reverse anytime soon but if prices continue to rise we may need to adopt alternative counts

The momentum is strong so please do not initiate a short position unless a confirmation in price is obtained!

Sensex Alternate count

Sensex Alternate count

Explanation
Sensex still looks to be in complex mode. Wave patterns are not clear

If our alternate count has to be considered as preferred we should start a rally soon

Lets wait for a day or 2 more to adopt a preferred count. There are couple of equally probable scenarios right now

Hindalco


Hindalco had a decent rally after breaking out of triangular patter. If you had gone long as suggested by us in our previous blog last week, you would have earned 7% return in just 3 days!

Please book your partial profits at current levels

Use a stop loss of 117 for a target of 131 for remaining positions

Time cycles also suggest we are nearby or forming a peak this week

Bearish implications VOID!

Sensex alternate count

Explanation

We will adopt this alternate count only after reviewing price action for next few days. As per this count we have target for Sensex of 17500. Lets wait and watch!

Hindalco alternate count

Explanation

Price decisively broke upwards with large volumes out of triangular pattern

We do not have any preference view but above chart gives an alternate view

We will adopt this alternate count only after reviewing price action for next few days

Upside target can be around 131 as per this count
DXY finally broke downwards and moved even below 77.50 making the bullish pattern void! (atleast in short term)

More aggressive traders can go long on Hindalco with strict stoploss of 109

Sensex 2009 new high!

Sensex

Explanation

Sensex made a new high today but the elliott pattern is not very clear. It is more corrective than impulsive. Sensex still looks to be in a complex mode
Today's new high asks for cover of any short positions and wait for the pattern to become clearer

If prices start moving up impulsively from here on we will need to adopt an alternate count. Lets give this negative view more 2 days to prove its validity.
A break of upward sloping trendline from March low onwards will be a good opportunity to short

Hindalco

Hindalco looks still in a consolidation mode with no clear direction of breakout
Volumes are drying up everyday
Prices are very near to upper boundary and a break above the trendline with large volumes is what we should look for to cover any short positions
We are expecting a clear direction before end of this week
If price is able to move past 112 mark and stays there please cover your shorts

DJIA - An end of an "ERA"!

DJIA

Explanation

I thought of analyzing other markets till the time Indian markets test our patience!

Please observe since 1929 DJIA has moved in the bullish channel with utter precision and a throwover in the final Cycle degree wave V
The end of rally in early 2000 represents an end of an era i.e. not only end of a Cycle degree wave but of a super cycle degree that started somewhere around 1800s
Also we are in Wave C of an ABC correction that started after wave (V) of supercycle degree
When dealing with waves of such degree it is imperative to use log scale and wave measurements in percentage terms & not arithmetically
As per "Elliott wave principle" stated "impulse wave relationships usually occur in percentage terms"
The modest target for DJIA is 3500 and can even go further down in the territory of previous Wave IV. I will not be surprised even if it reaches in 1000 range. "We are dealing with supercycle corrections here"
This same explanation is valid for some of the other developed markets as well
Also momentum tools helps in wave counting, if used wisely. We can get classic divergences when in wave 5, if in wave 3 we should see a clear breakdown in momentum -- staying in extreme territories
The above interpretation is as per my understanding and may have other probable scenarios

Patience is virtue!!!

Explanation

Patience is virtue in 4th wave corrections
Sensex is forming a complex pattern which should resolve lower
It is frustrating for a short term trader to be caught in such a complex pattern but it always helps to assume 4th wave as a complex correction even before it develops. It can save a lot of mental energy
We have a clear divergence in RSI
One can initiate a short position at this level with stop loss at top of wave b. The risk reward ratio looks appealing
Hindalco

It has been almost a month since Hindalco is moving in a very tight range.
It is imperative not to loose patience as Mr. Market has not proven us wrong till now, stop loss level at 116 is still intact
Please bear in mind Sensex has reached near its previous top but Hindalco is still ~6% below the high it made since March

Confused correction!

Sensex

Explanation
Sensex looks to be in a complex 4th wave correction
The momentum is continuously decreasing
Avoid any long positions in this "sucker" rally
Global markets are not looking good, with Chinese market weakening everyday
DXY has given a good impulse wave up and should head for a big rally
Copper looks to have formed a major peak around 293
We maintain our negative bias as long as 15970 is not taken out

Hindalco

Explanation
Hindalco is relatively very weak and the momentum is also downwards
We still maintain our negative views on Hindalco as long as prices do not break above 116 levels

A crucial juncture!

Sensex

Explanation

Sensex has formed a Head and Shoulder pattern with neckline near 14700 levels. This level is providing a very strong support and needs to be broken for further negativity
The momentum is decreasing everyday but it is imperatve to get a price confirmation
It is amazing to see how not only the global equity markets but currency and commodity markets are moving in a range since past few days. Are we still decoupled???
Shanghai is dragging down most of the Asian pacific markets along with it and should lead the direction
Dollar index is moving in a range and should breakout soon in upward direction. This will be bearish for commodities and commodity stocks
We also observe 38.2% retracement level of fall has been reached in multiple markets like DJIA, FTSE 100, ASX 200, 61.8% level reached in Copper
VIX index also looks to have given breakout in upward direction
Baltic Dry index has already started moving down after completing 3 waves up. This cannot be a good sign
Different asset classes (Equities, Commodities, Currency) reaching crucial resistance levels at the same time isn't just a mere coincidence!!! Think about it!
Hindalco

Hindalco Vs. Dollar Index (DXY)

Hindalco looks to be forming a triangular pattern

For negative price confirmation, range of 99 -100 needs to be broken

Also note the close correlation Hindalco shares with Copper and inverse relation with USDollar

Copper (currently at 276) needs to break below 273 levels for some major correction

Reliance Industries

Our target of 1880 is achieved in Reliance!

We asked for initiating short position at 2000 with target of 1880 to 1900

MACD has given negative crossover and is below 0 line. If prices fall below 1870 one can initiate short position again as long as prices remain in the corrective channel.