Monday, January 21, 2013

Nifty: A stealth downtrend has started!

By Waves Strategy Advisors. For more information on daily equity research write to or visit
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 MidcapSmallcap 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:
Chart courtesy:
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.
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