Tata Motors – A major topping process!

Tata Motors – A major topping process!

By Waves Strategy Advisors. For more information on daily research report that contains Nifty and 3 different stocks write to helpdesk@wavesstrategy.com or call on +91 9920422202. Visit www.wavesstrategy.com

Tata motors chart shows very interesting and crucial juncture. Prices have moved up on slower momentum on different degrees from short to medium term. A very important topping process is forming in this stock.

To know more such opportunities in stocks and the direction of Indian equity markets subscribe to the daily research report “The Financial Waves Short term update”

        “Reliance Industries results were above expectations but the stock made a low of 880 below the price before the result announcement. RBI not only cut repo rate but CRR as well by 25 bps but Nifty reversed on same very day and is trading below the levels before the monetary announcement.”

Do not trade on NEWS but use technical charts and think objectively!

Tata Motors Weekly chart:

Tata Motors Daily chart:

Tata Motors 120 mins chart:

Waves Analysis:

We have mentioned in the previous update of 21^st January 2013, “Prices are in the matured stage and moving in the form of wave E of 5. Loss of momentum on upside shown by momentum indicator price ROC (shown above in weekly chart) suggest that upside is limited and prices should not move above 345/350 levels”.

We have been very accurate in capturing the top for Tata Motors. Prices have exactly reversed from the upper trendline of the wedge pattern consecutive for third time and moved lower till the support of 285 levels. 

Momentum indicator price ROC exhibits strong negative divergence (shown above in weekly chart) and steep fall in the previous week suggested that prices have completed wave E of wedge pattern near 340 levels and started an impulsive move on downside. At present, it seems that wave ii has completed near 61.8% retracement of the prior wave i and started the next leg on downside in the form of wave iii as shown above in 120 mins chart.

In short, 315 will act as a strong resistance. As long as this level is not taken out on upside our bias is negative and once again prices could move lower till the support of 285 levels. Further, move below 280 will take prices even lower till the next support of 260 levels.

By Waves Strategy Advisors. For more information on daily research report that contains Nifty and 3 different stocks write to helpdesk@wavesstrategy.com or call on +91 9920422202. Visit www.wavesstrategy.com

Nifty - A major top in place!!!

Bottom Line: RBI cut repo rate by 25 bps exactly as predicted by Bond yields showed in previous report. Nifty had a strong reversal day!

Nifty Daily chart:

  

Nifty 60 mins chart:

Wave Analysis:

We mentioned in previous update, “From wave perspective, the up move looks to be near completion but we will continue to adopt conservative stand by waiting for bearish confirmation below 6020 followed by 5980. Today’s close will also be important which will indicate market’s reaction to RBI’s stand on monetary policy. A negative reaction to positive event is bearish and vice-versa…”

12 month Bond yield chart helped in predicting cut in repo rate by 25 bps. RBI also reduced CRR by 25 bps. Nifty reacted higher as soon as the announcement was made. Prices in next hour after announcement touched a high of 6111. However during second half of the day prices failed to sustain at those levels and moved down equally fast and made a low of 6043.

This not only produces a strong reversal bar on Nifty but many of the stocks that moved up along with index but gave away all the gains and closed negative. Such reversal bars if followed by a negative day is bearish and will indicate an important top is in place. We have been expecting completion of wedge pattern since a week now but as mentioned before a confirmation of wedge completion requires break of lower trendline of the pattern. As shown on 60 mins chart, prices have closed near the lower end of the trendline and a move below 6020 will confirm its break.

Yesterday’s strong down move in later part of the day also retraced the up move from 6060 to 6111 in lesser time thereby providing negative confirmation on smaller degree. All the sectors except FMCG closed negative and advance decline deteriorated to 1100 vs 1736 on BSE. Midcap and Smallcap indices were positive in morning but closed more than half a percent down.

As shown on the daily chart, each of the up move has been associated with slower momentum. RSI is now exhibiting 5^th divergence on daily scale which is a rare event. Such strong divergences can occur either in sideways consolidations or before strong down moves.

Positional longs can now trail their stops toward 6000 level from 5980 mentioned previously.

In short, a move below 6020 will confirm that the down leg has started which will break the wedge pattern on downside. Also a negative close today will confirm the significance of Key reversal bar formed yesterday.

Bond yield helped us predict cut in repo rate by 25 bps!

Bond yield helped us predict cut in repo rate by 25 bps!

By Waves Strategy Advisors (www.wavesstrategy.com). For more information write to helpdesk@wavesstrategy.com or call on +91 9920422202

The following excerpt was published today morning in “The Financial Waves research report”before equity markets opened. We have been using 12 month bond yield to forecast RBI stand on repo rate and have been perfectly right even this time in expecting 25 bps cut!

Bottom Line: Bond yield indicating a plausible rate cut by 25 bps! We have been successfully using Bond yield chart to predict RBI action on repo rate. We have been successful in expecting no rate cuts over past few quarters.

12M Government Bond Yield:

Above is the chart of 12 Month Government Bond yield.  We use this chart to predict the next action of RBI monetary policy on repo rate. Generally, Bond markets act as a leading indicator for the government action. Last policy was announced on 18^th December 2012 in which we have been right on no rate cut in repo rate.

Looking at chart we find that since June 2012 to December 2012 yield was moving between 7.90 and 8.10 levels. For the first time since June 2012 yield has moved below 7.90 levels and closed at 7.78 yesterday. This indicates there can be a probable rate cut by 25 bps. However, if Bond yield would have been near 7.70 levels this would have increased our conviction towards rate cut.

In short, Bond yields are indicating repo rate cut by 25 bps – from 8 to 7.75. It will be important to observe how equity markets react to this widely expected move by RBI.

To know what lies ahead for Indian equity markets and the crucial levels that will determine the trend ahead for Nifty write to us at helpdesk@wavesstrategy.com or call on +91 9920422202. For more information visit www.wavesstrategy.com 

Ratio Analysis: HDFC BANK /BANK NIFTY

Ratio Analysis: HDFC BANK /BANK NIFTY

For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

On 18th January, 2013 HDFC Bank declared Q3FY13 results and news flashed on Reuters is as follows: 

REUTERS - HDFC Bank (HDBK.NS), India's No.3 lender, met forecasts with a 30 percent rise in quarterly profit on Friday led by higher loan growth, better fee income and stable asset quality.

Mumbai-based HDFC Bank, which has posted profit growth of more than 30 percent every year for the last decade, said its net profit rose to 18.6 billion rupees in the quarter ended December from about 14.3 billion rupees a year earlier. Net interest income grew 21.3 percent to 38 billion rupees.

We have mentioned many times that news can produce one spike but the trend remains as it is. Here, we have observed the same thing, prices have made an intraday high of 674 (on 18^thJanuary 2013) and on very next day it has continued the down move in the falling channel. Also Ratio analysis helped us to see the broader view and suggested that outperformance of HDFCBank ended against Bank Nifty and underperformance has started. Below chart is picked up from“The Financial Waves STU” published on 21^st January 2013.  

HDFCBank/ BankNifty Ratio chart: 

HDFC Bank Dailychart:

HDFC BANK 120 mins chart:

Wave Analysis:

The first is the  ratio chart of HDFCBANK / BANKNIFTY. It means HDFC BANK’s performance against BankNifty. Since 2011 to 2012 ratio moved higher from 0.031 to 0.035.  Within this period HDFCBank was the strongest and outperformer within the banking sector. Thereafter, in the last month of 2012 it has breached the upward moving blue channel on downside and moved lower. This suggests the end of outperformance of this stock and start of underperformance. In short, as long as ratio moves below 0.025 levels our bias is negative and prices can move lower till the next support of 0.020/0.018 levels.

As shown above in daily chart of HDFC Bank, prices have made a high of 705 levels in the month of November 2012, consecutive for fourth time it has taken resistance near upper end of the channel (marked by red color symbol) and broke the channel on downside. This is a negative sign.

We can observe above in 120 mins chart, prices have retraced 23.6% of the previous up move from 485 to 705 levels. It has formed lower top and lower bottom in the small red channel. This gives second negative confirmation.

In short, as long as prices move within the downward sloping red channel our bias is negative. Move below 650 will continue the underperformance against Bank Nifty and it could move lower till 50% of retracement level which comes near 600/595 levels.

To get more pair trading strategies (Ratio analysis) subscribe to “The Financial Waves STU”(Equity report) or write to us at helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

Rupee appreciated against US Dollar exactly as expected! But will it continue???

Rupee appreciated against US Dollar exactly as expected! But will it continue???

By By Waves Strategy Advisors. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Is it really the announcement of deregulation of diesel prices supported the Indian Rupee and lead to sharp move from 54.50 to 53.50 levels? Even if this is the logical reason that can be explained fundamentally but was it possible to trade USDINR pair based on the news announcement!

News or events can trigger short term price movement but cannot be always used from trading perspective. Elliott wave and technical support & resistance levels provided that one leg on downside towards 53.50 was pending. We have been mentioning that if 54.50 breaks we can expect prices to move towards 53.50 levels. Prices today are quoting exactly the same level right now!!!

Many traders and broking houses now expect USDINR to be bearish and can move below 50 levels. People normally extrapolate the trends without having any objective justification. We beg to differ here and do not expect prices to go anywhere near it.

From Elliott wave perspective, USDINR has completed wave B at 55.60 and it is currently moving lower in form of wave C.

The following chart is picked up from our alternate day publication “The Forex Waves STU”published on 21^st January 2013. Along with it we cover other INR pairs such as EURINR, GBPINR and JPYINR

USDINR 60 mins chart:

To know the probable target of this wave C and where we expect it to reverse you can subscribe to our currency research report. At important turning points Indian equity and currency markets turn exactly on same day or sometime at same hour.

Do not get carried away in euphoria and get extremely optimistic about Indian Rupee or Nifty.Think objectively and trade wisely which is opposite to the crowd behavior!!!

For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Nifty: A stealth downtrend has started!

Nifty: A stealth downtrend has started!

By Waves Strategy Advisors. For more information on daily equity research write to helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

We have been mentioning about the weakening uptrend and topping zone for Nifty between 6050 and 6100 levels. Nifty has so far made a high of 6093 today with a Gap up opening. The past few days of rally on Nifty is not supported by Midcap, Smallcap sectors and the overall breadth of the market has been weakening.

Does this mean the downtrend has started in major market but the index is simply showing wrong picture by making new 2 year’s high???

The below breadth charts clearly shows what makes us cautious on long side:

Chart courtesy: icharts.in

Chart courtesy: icharts.in

The following is a small part of the daily research report “The Financial Waves” published today -

Smallcap and Midcap index on Friday closed negative even and advance decline ratio continues to favor more declining stocks than advancing.

The 2 Breadth charts shown above of Advance decline line and Net monthly Highs – lows % clearly shows the deteriorating overall breadth. The AD line has sharply deteriorated over past few weeks and has been constantly moving down when the major market is moving up. For us to be chronically wrong and index to start new bull run I would have expected an inverse of the AD line where number of advancing stocks should have been significantly higher than the declining stocks with each up move.

Also net new monthly highs should have been more but since July it is also constantly falling. The above breadth indicators further conforms to our overall outlook that we are at major turning juncture.

In short, we continue to look at current market as forming an intermediate ……………

The above explanation is just a small part of the overall technical outlook. The complete research report clearly shows important price levels with patterns and Elliott wave counts.

Subscribe now and see yourself the key turning levels and path ahead for Indian markets! For more information write to helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

Elliott Wave: A tool to forecast major turning point’s successfully!

Elliott Wave: A tool to forecast major turning point’s successfully!

By Waves Strategy Advisors. For more information visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Market does not move randomly. It always moves in patterns and that to not vague patterns but recognizable patterns with precession. Patterns such as Head & Shoulders, Triangle, Wedge, Flag, etc...works well to predict the market.

If you are a new trader or investor, learning the Elliott Wave Principle is an important step on your path to trading success. 

One of the easiest places to see the Elliott Wave Principle at work is in the financial markets, where changing investor psychology is recorded in the form of price movements. If you can identify repeating patterns in prices, and figure out where we are in those repeating patterns today, you can predict where we are going.

Elliott Wave analysis has a few rules and methods to be followed. But only by knowing the rules one does not become an Elliottician. One needs to know the practical goal of any method used.

Since Elliott wave analysis is based upon price patterns, a pattern identified as having been completed is either over or it isn't. If the market changes direction, the analyst has caught the turn.

If a trader identifies and captures the pattern correctly, he can emerge as a winner and make profits.

Below chart of NSE Midcap shows how different technical studies like RSI, Channels, Elliott wave, etc are applied.

To know more about Elliott wave as well as other Technical tools Register yourself to our training sessions in Mumbai by writing to us at helpdesk@wavesstrategy.com or you can call us on +91 9920422202.

Learn simple and advanced technical tools and trade independently!

Nifty in topping process probably for the year!

Bottom Line: Nifty made a high of 6069 within our topping zone of 6050 & 6100 levels!

Nifty Daily Line chart:

Nifty 60 mins chart: 

Wave Analysis:

We mentioned in previous report, “From trading perspective it is important for prices to show reversal signs near 6050 – 6100 levels. Unless we see reversal bar at those level avoid initiating short positions as market has been constantly forming higher highs and higher lows so far.In short, our bias over short term continues to be positive with 5940 as important level on downside but we remain cautious on long positions as the trend looks to be in matured stage with immediate target of 6050 – 6100!”

Nifty made a high of 6070 between the range of 6050 to 6100. We continue to believe that Indian markets are in topping process and should top out anywhere now. Prices continues to move up on slower momentum and BSE Smallcap index closed in red due to selling pressure in Smallcap sector during final hour of trading. Also number of declining stocks was marginally higher than that of advances which continues to conform to our topping process.

We are showing important channels which have worked very well along with price ROC that shows strong negative divergence and loss of momentum. The 2 blue channels shown in first chart clearly gives the level of resistances and supports. At 6100 there is confluence of bigger channel and smaller channel. Intersection points of trendlines are very important points. One drawback on using bigger channel is that the degree of error increases with increase in time. By this I mean that a slight movement in trendline near its origin can result into big movement in later periods.

If prices decisively closes above 6120 – 6140 levels it might result in re-entering into the bigger channel and will open up further positive possibilities. However such price action requires strong momentum on upside which is lacking as seen from Price ROC below.

From wave perspective we continue to believe that Nifty is in final vth leg up and this scenario is valid as long as prices does not closes above 6100 – 6120 levels. A move below 5950 will provide first negative confirmation that an important top is in place.

In short, we do not have negative price confirmation for now and so the bias continues to be cautiously positive. 

To subscribe to daily research update on Nifty write to helpdesk@wavesstrategy.com or visit www.wavesstrategy.com

NSE Midcap index: A secondary confirmation to Nifty path ahead!

NSE Midcap index: A secondary confirmation to Nifty path ahead!

By Waves Strategy Advisors. For more information visit www.wavesstrategy.com or contact us on helpdesk@wavesstrategy.com

In our previous update we mentioned that it is not only Nifty which is providing important topping signals but also the secondary indices are showing topping signs.

In the report published on 11^th January we showed NSE midcap chart and Elliott wave counts as well. We mentioned 8500 as important level and prices made a low very near to this level and bounced back today. Elliott Wave counts suggested one final up leg pending in Midcap index as well before the top is in place….

NSE Midcap Index Daily chart:

(Elliott wave counts are removed from the above chart)

The daily research report “The Financial Waves” mentioned that, “In short, 8500 will be an important level which will decide that the uptrend in midcap index is over. Any move back above 8860 can lead to a final push towards …………..level on upside. We will be closely observing Midcap and Smallcap index over coming days to look if we see a topping pattern formation.”

To know more on direction of Nifty and Indian equity markets from short to medium term subscribe and see yourself the various technical tools we are using along with charts that is making us take this stand. Write to us at  helpdesk@wavesstrategy.com or call on +91 9920422202.

Nifty path ahead and an upcoming Tsunami!

Nifty path ahead and an upcoming Tsunami!

By Waves Strategy Advisors (www.wavesstrategy.com) or write to helpdesk@wavesstrategy.com

Nifty gave a very important close yesterday that reduces all but 1 most probable scenario. As per the Elliott wave counts chances of Nifty nearing an important top is very high and probably a top for the year 2013.

We published an interim report at 2 pm for our paid subscribers when Nifty almost touched 5950 on 10^th Jan 2013 mentioning, “Nifty has failed to sustain the Gap today and has moved near 5950 level. Nifty looks to be forming ………….. pattern. Positional traders can start booking profits and keep ………..as very important stop for all long positions. There can be one final attempt on upside over next few days towards …………… maximum!”

In today’s morning report we explained what made us make such a bold statement and explained various technical reasons.

All advanced & basic technical tools like Wave counts, momentum indicators, Time cycles, Channels, Fibonacci retracements are in sync and indicating that an intermediate top is very near. We would advise our subscribers to……………

In today’s morning report we have shown & explained each and every of the above mentioned technical concepts along with the crucial levels and with path for short to medium term trend with time frames...

Nifty Daily chart:

(removed Wave labelings, Time cycles, Path ahead and crucial levels from above chart)

This is not it. We have shown Bank Nifty and NSE midcap indices as well that seconds our stand.

In short, expect a few more days of sideways action then a final move up towards ………… before we top out for the year!!!

To see the complete chart and the details that are missing above along with explanation on Channels, RSI, Elliott wave counts, Sentiments, Fibonacci retracements, momentum, Cycles, subscribe now to the daily research report “The Financial Waves “ If we are right, time is running out. Do not get carried away in the euphoria but think objectively using technical tools and Learn & Trade with no subjectivity!!!

To subscribe the daily research report visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com, call on +91 9920422202

MCX Crude: Perfect Channeling Technique

MCX Crude: Perfect Channeling Technique

By Waves Strategy Advisors (www.wavesstrategy.com)

MCX Crude is moving perfectly in a channel by forming higher highs and higher lows. Channel technique is a simplest way of technical analysis and one can trade in the trend very well. Below is 60 mins chart of MCX Crude.

MCX Crude 60 mins chart (January Contract)

Wave Analysis:

As shown above in 60 mins chart of MCX Crude, in the previous trading session prices failed to cross the high of 5170 levels and pullback on downside and arrived near the trendline support.

Momentum indicator RSI alleviated the overbought position and came near the support level of 30. This is positive sign for this commodity. 5100/5090 will continue to act as a strong support.

Prices have also come near the support of the channel. RSI along with channel gives high probable trade setups. A blue candle formation should provide positive confirmation and one can trade simply using Channel, RSI and a positive bar!

In short, as long as prices move within the channel our favored view is positive.

To  know what we expect for other commodities like Gold, Silver  & Copper  write to us  at helpdesk@wavesstrategy.com or visit www.wavesstrategy.com call us on +91 9920422202

Ratio Analysis: HUL/Nifty

Ratio Analysis: HUL/Nifty

By Waves Strategy Advisors (www.wavesstrategy.com) 

HUL was one of the outperformer before, but has started underperforming since Oct 2012. At present, many investors find best opportunity to buy HUL on dip and expect a resumption of uptrend.

However, at the same time question arises that why HUL is not moving higher despite of strong up move of Nifty?

Answer is difficult and sideways action of stock increases confusion for the investors. But Ratio analysis of HUL/NIFTY clears the picture and down move in ratio indicates the start ofunderperformance of HUL against Nifty. This is cautious note for investors.

HUL/NIFTY Ratio Chart:

HUL Daily Chart: 

Waves Analysis:

Above first chart is of HUL/NIFTY ratio chart. Since February 2012 prices were moving higher in the upward moving blue channel (marked in blue color) and made a high of 0.050 in the month of October 2012. This indicates outperformance of HUL against Nifty in these nine months. However, it has formed double top near the same level, breached the channel on downside and moved lower. This has ended outperformance of this stock and started the underperformance against Nifty. At present, ratio is moving lower in the downward sloping channel. 0.040 is the strong resistance. As long as it is intact on upside ratio can move lower till 0.032 levels.

As shown on daily chart, in the month of October 2012 prices have made a high of 580, thereafter it has moved lower and formed H&S topping pattern. Neckline is placed at 515. A move below 515 will provide the first negative confirmation.

HUL is consolidating between the range of 515-550 levels from last few trading session. This is perfectly in sync with ratio chart and suggests weakness in this stock.

In short, a break below 515 – 510 can provide good selling opportunity for a move towards 470 - 450 levels which is the pattern target. However, any move above 555 will indicate short term uptrend is still intact.

To know more about equity research products write to us at helpdesk@wavesstrategy.com  or call us on 9920422202