Wishing you all a very Happy & Prosperous 2012!

Waves Capital: Nifty moved exactly as we have been anticipating, Snapshot of past 3 days!!!

Waves Capital: Below excerpts are picked up from past 3 Financial Edge short term updates and this itself proves how accurately we are measuring the pulse of Indian markets. Write to us on helpdesk@wavescapital.com if you would like to subscribe to this Daily research publication on Indian Equity market.

Published on 27th December 2011 before 8:30 am

Nifty 60 mins chart

Published on 27th December 2011 before 8:30 am, “..we now stand at crucial juncture and there are other plausible scenarios opening up since Nifty is failing to move above 4800 levels”

Happened: Nifty made a high of 4800.40 and turned immediately from there and made a low of 4724 after falling steeply from 4800 levels we had mentioned.

Published on 29th December 2011 before 8:30 am

Published on 29th December 2011 before 8:30 am, “…A break of channel increases our bias towards negative side. Below 4690 we might head towards 4630 levels.”

Happened: Nifty made a high at 4700 failed to sustain there and broke 4690 then making a low of 4639

Published on 30th December 2011 before 8:30 am

Published on 30th December 2011 before 8:30 am, “In short, during last trading day of the year 2011, it is advisable to have very less exposure on either side. Bias for the day is sideways and Nifty can move between 4620 – 4690 levels.”

Happened on 30th December 2011: Nifty made a high of 4690.45 and low of 4610, finally closing the year at 4618 (average close 4624)

Write to us on helpdesk@wavescapital.com for subscribing to The Financial Edge report and see it yourself well before market opens what Nifty and stocks are going to do for the day!

Crude uptrend driven by news event but will it last!!!

The below is an excerpt from Commodity Edge short term update by Waves Capital which is published on Daily basis. A few labelings are purposely deleted since it is a free section

Crude Daily

Crude Hourly

Crude rallied sharply yesterday after a senior Iranian official on Tuesday delivered a sharp threat in response to economic sanctions being readied by the United States, saying his country would retaliate against any crackdown by blocking all oil shipments through the Strait of Hormuz, a vital artery for transporting about one-fifth of the world’s oil supply. Crude immediately started going up and came very close to previous top of 5392 level.

We still continue to believe that we are in wave ? formation but the short term trend continues to be up. Wave ? in case of flats can exceed start of wave ? and can extend even further. The magnitude of the upward correction is always difficult to forecast and time wise this wave shall usually take more time to develop. This is what has happened here as well.

To read where crude is headed from here and if news is really driving crude prices higher write to us on helpdesk@wavescapital.com for subscribing to our Commodity Daily publication..

Hindalco BLUE PRINT!!!

The below chart was published in Financial Edge Short term update, a Daily publication of Indian market. A few of the labelings have been purposely removed. Write to us on helpdesk@wavescapital.com if you would like to subscribe.

Hindalco Daily Chart

On the daily chart we can see an amazing scenario developing in Hindalco prices based on the study of Time cycles & Fibonacci relationship. The stock has retraced 61.8% of the entire upmove from 37 -250 levels.

Prices have corrected 55% from the highs of 250 levels in 233 days both 55 and 233 are Fibonacci numbers. Also the drop in value terms has been 140 (Fibo 144) and average per day fall is 0.60 (Golden ratio – 0.618). All this simply signifies the importance of Fibonacci series in stock markets. This also indicates the low formed at 113 is an important low and odds increases that this low shall be respected atleast for few weeks.

In our view the entire upmove from 2009 lows has rallied in an A-B-C formation. On the larger time frame we have shown the 328 days cycle and 82 period cycle. Both cycle has formed the bottom in first week of November thereby indicating that an uptrend can last till February 2012.

To get the short term and medium term price targets with crucial risk management levels write to us on helpdesk@wavescapital.com

Nifty took a "V" turn...

Nifty Daily

Nifty 10 mins chart:

Nifty 10 mins chart shows that we have moved down in the form of a-b-c correction and not 5 waves impulse. As we know wave C should be 5 waves move and since current down leg from 5099 to low of 4540 cannot be counted as 5 down we think this was only wave b of higher degree wave b as shown on daily chart. We have now started wave c on upside of this b wave.

Also yesterday’s rally was steep enough and retraced the previous c leg faster thereby indicating that current uptrend can give us bigger pull back on upside than anyone is actually expecting. Also we can see a break above the downward sloping red channel as shown on the 10 mins chart. Also in this current down leg we did not see Nifty moving down by more than 120 points from previous day’s close but a rally of 150 points in single day yesterday make our positive bias over shorter term stronger.

Sentiments have been bearish across and even most commonly read newspapers have started giving downward projections for Indian markets. This for us is bullish when combined along with other technical indicators.

In short, the bias is now positive over near term as long as yesterday’s opening gap between 4600 – 4550 is unfilled. A move above 4800 will provide further positive confirmation that we have started a move up till 4950 – 5000 levels. However, a follow-up rally will provide more vital information if we are indeed in for bigger rally or the entire up move from 4540 was just corrective 3 wave structure.

Waves Capital / Waves Strategy Advisors: Elite market Forecasting and Research House in India

About Waves Strategy Advisors:

Website: http://www.wavesstrategycom/
Linkedin / Facebook / Twitter: WavesStrategy

Free articles on Commodity / Currency / Equity: http://wavesstrategy.com/index.php/free-articles/stocks.html

Various Services offered: http://wavesstrategy.com/index.php/services.html

Contact: helpdesk@wavesstrategy.com

Mission:
Provide Quality & Customized Research reports covering Equities, Commodities and Currency markets

Provide intraday trading suggestions and positional calls for Equity, Currency and Commodity markets

Risk Management and Hedging advisory for firms exposed to Commodity and Currency fluctuations

Outsourcing Research Solutions to Brokerage houses

Distance learning module and Training on Trading using Elliott waves and other Technical analysis indicators

Educate and train investors and public at large about scientific and systematic mode of investing and trading.

Nifty turned exactly on the 8th day with a spike up, the way we were anticipating!

Nifty Daily chart:

Time Anticipated on 29th November:

Happened: Rally terminated on 8th day, just took 1 more day than we anticipated!

Nifty 10 mins

We mentioned before on 29th November that “a close observation of the above Daily chart reveals a very important fact that in all prior instances (since the fall started in November 2010), after every steep move down Nifty rallied fiercely up for 6 to 7 days and ended that rally with a spike. It then turned down on the 7th day taking back prices to where it started matching the momentum of uptrend. The magnitude of rally has ended between 38.2% - 50% on prior occasions. If the similar pattern and cycle has to continue we will rally for 4 more days (2 days of rally is complete) till 4940 levels and should turn down from there with a spike.”

The magnitude of correction this time exceeded beyond 50% but Time and characteristics of upside correction was exactly like what we expected. The uptrend lasted for 8 days, took 1 extra day to complete the upside correction than we anticipated but turned by making a high near 5100 – exactly 61.8% retracement of previous down move. Nifty turned immediately from there on 8th day itself with a spike i.e. on Wednesday and we can see a steep selloff that happened yesterday.

Also in our previous days’ report - The Financial Edge published by Waves Capital we mentioned that “In short, we will now wait and watch if Nifty closes below 5000 for further downside move or manages to move above 5100 before going down”. We have been very accurate in catching this turn as well. As soon as 5000 was broken the selloff went to as low as 4925.

As shown on 10 mins chart, we have started a down move within the red channel which can make a new low at 4640 but it is too soon to commit that. We would see for a follow-up selloff today and a close of gap at 4850. As long as 5050 is intact we now see the current downtrend as either wave (b) of b or next leg down in form of wave c. Either of the scenarios indicates short term downtrend for now in Indian Equities.

USDINR moved exactly as anticipated six months back!

Anticipated on 16th May 2011: This chart was published in our Currency short term update during times of extreme optimism towards Rupee outperformance to USD but we were expecting a move up towards 52.

USDINR Anticipated on 16th May 2011:

Happened:

We mentioned before on 16th May 2011, “The weekly chart of USDINR shown above is picked up from our currency report publication where our currency analysts predicts movement of Indian Rupee against various currencies like USD, GBP, JPY & Euro. Looking at those charts and USDINR above it is mentioned that there can be some serious depreciation in Indian Rupee against USD. We can clearly see the Elliott wave markings on the chart and prices have formed Triple bottom at exactly 61.8% retracement of rally from 39 to 52 levels. The downward move is also overlapping and we can see a strong positive RSI divergence on weekly scale.

All this indicates USDINR should now start moving up and break the downward trendline. A break above 45.10 will provide strong confirmation that we might have ended multi-month down move on USDINR.

This also sends across bearish picture for Indian equities. We do concur that currency and equities do not move in lock step but the correlation does increases at major turning points.”

Currently USDINR has completed 5 waves up from the bottom at 44 to 52 levels and shall now correct the entire up move. However we might have completed just wave i of 5 and are in wave ii of 5. Either ways the short term trend points downwards. Subscribe to Forex alternate day report by Waves Capital to see where current wave is headed or write to us on helpdesk@wavescapital.com

Nifty is forming a big Head & Shoulder pattern!

Nifty Daily chart

Nifty 10 mnis chart:

 Nifty daily chart above shows a Big Distribution Head and Shoulder pattern that replicates text book example of Edwards & Magee book. Head & Shoulder topping pattern is a bearish pattern and occurs at major tops. A confirmation of completion of pattern is obtained only by break of the neckline and unless that happens, acting on this pattern formation is not a good idea. We are closely observing Nifty movements and a break occurs below the recent low of 4640. Any close below that level will be extremely bearish for Indian equity markets and gradual fall will change to a steep falling market. However, unless we see a close below 4640 we shall continue to move in the red channel as shown on the daily chart.

To support our pattern analysis we are using On Balance Volume (OBV) indicator. This indicator is created by adding the volume to previous cumulative value if the close is above the previous day’s close. The value of volume is subtracted from this cumulative value if the close is below the previous day. This indicator is therefore showing that volumes have been more on the downside than on the upside and the value is at the levels of March 2009. This is very crucial observation as it indicates lot of volumes has been moving on the downside and less volumes on the upmove. This perfectly supports the right shoulder formation of Head & Shoulder pattern which suggests downside volume increases on left shoulder and upside volume decreases. Also OBV is a leading indicator and it leads the prices at important junctures. OBV has given break below the long term support line and so Nifty should do so very soon!

Over short term, as seen on 10 mins chart we are forming a short triangle that should give a breakout upside and index can move towards 5100. However we might be late in the uptrend and so we remain cautiously positive till 5100 levels. A move below 4850 will strongly indicate that the uptrend is complete and the next leg down has started.

In short, the bias is positive over short term but given the cluster of resistances at 5100 levels we would remain very cautious.

Interim Update

Bottom Line: Please do not get carried away with opening GAP. The Big GAP looks more towards emotional trading rather than actual buying. We still believe this is an upward correction and not new trend up as it has taken more time to retrace previous down leg so far. Strong resistance now lies at 5050 and the probability of this getting breached is low. If Nifty is still following its 6 to 7 days up cycle then we should get a spike up tomorrow or on Monday and turn down the same day