Monday, April 18, 2011

Nifty moving in complex wave iv!

Nifty 10 mins

On Friday, the IT major INFOSYS declared its results and market moved in extreme reaction. We never remember after stabilizing such a deep impact of results on Infosys. The stock corrected by almost 10% by the day’s close and there was no significant bounce back. The volumes were almost 10 times more than that of the 30 day’s average. This reflects huge dump of IT stock in the market. Honestly speaking results were not that extremely bad that will call for a spike in price of such magnitude. We expected that the event will be an end in spike but Friday did not produce any reaction. Please stay away from this stock atleast over short term and we are monitoring closely if this stock is close to bottoming out.

A fall of more than 170 points on Sensex was due to Infosys and all other stocks started reacting negatively in line with the major heavy weight. It will be crucial to observe how markets react now over a day or 2.

On 10 mins chart, we can see some MACD divergence and probably completion of the ending diagonal pattern. A move above 5840 will provide first small positive confirmation but beware that we might be developing into more complex 4th wave correction. It would be ideal to wait for atleast 5880 levels to be taken out on upside for strong positive confirmation. A move below 5780 – 5800 might indicate further correction plausible but the correction looks almost complete time wise.

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