DJIA (US Markets): AT LIFE TIME HIGH! BUT Nifty still down 10% !!!

DJIA (US Markets): AT LIFE TIME HIGH! BUT Nifty still down 10% !!!

By Waves Strategy Advisors, For more information visit www.wavesstrategy.com To subscribe to alternate Global research “The Global Waves” write to helpdesk@wavesstrategy.com or call on +91 9920422202 / +91 22 28831358

The crisis of 2008 supposed to have originated in US and Europe which later spread across the globe.

US unemployment rate and other macro economic data still indicate that they are still not completely out of the woods. However, whatever may be the case, interestingly US equity market – Dow Jones Industrial Average is at LIFE TIME HIGHS!!! In contrast, India was supposed to be a growth story and relatively insulated to an extent from the world financial crisis but Indian equity markets trading almost 10% below the life time highs. During such scenarios it is therefore important to use objective tools like Elliott wave analysis and technical indicators when normal fundamental logics goes for a tailspin…

DJIA Weekly Chart:

DJIA Daily Chart:

Wave Analysis:

As shown above in weekly daily chart of DowJones Industrial Average (DJIA), prices have breached the previous high of 14200 which was made in the month of October 2007 and made a life time high of 14540. This index has characteristic to move in an expanding pattern. Since 1999 prices are moving in an expanding pattern (shown by black color trendline). Up move from 2010 seems corrective in nature and prices have formed similar expanding pattern as seen from daily chart.

As per wave perspective, prices have ended primary wave (5) in the month of 1998 levels. Since, then it is moving in expanding pattern in a corrective manner (A-B-C-D-E). In 2009, prices have finished primary wave (C) near 6000 levels. Thereafter, it has moved higher in the form of primary wave (D).

As seen in daily chart, prices are at life time highs and there is still some steam left. Interestingly, wave (e) = wave (a), wave y= wave w and wave (e) = 161.8% of wave (c) comes near the resistance zone of 15200-15500 levels. Looking at current scenario, trend remains positive over medium term and prices can move higher in the form of minute wave z of minor wave (e).

In short, even though prices are in matured stage of uptrend there is still more room left before the major trend on downside begins. We are not seeing any reversal signs as of now and move below 14000 will provide first negative sign. 15200 – 15500 is the maximum where the current trend can go… 

Don’t let a near term opportunity in DJIA pass you by. Get instant access to Global research (The Global Waves). Along with equity index, this report also contains EURUSD, Comex Gold, etc…  To subscribe this report write to us at helpdesk@wavesstrategy.com or call us on +91 22 288313588 / +919920422202 or visit www.wavesstrategy.com

Nifty in matured downtrend! Elliott Wave analysis

Bottom Line: Nifty gave strong Gap up opening but failed to sustain the gap indicating that the trend remains negative!

Nifty daily chart:

Nifty 60 mins chart:

Wave Analysis:

We mentioned in previous update, “For some meaningful bottom to form it is important for overall breadth to improve and prices should form bottom reversal pattern that has not happened so far. In short, we will be closely observing how prices react from 5580 level to decide if consolidation can be expected. Failure to show any reversal signs will indicate there is more steam left on downside. For now the trend continues to be down as long as 5720 is intact on upside.”

Nifty had a strong Gap up opening yesterday and prices made a high of 5718 very close to the mentioned level of 5720. However, for the 3^rd time prices failed to sustain the sharp up move and closed negative. This will lead to bulls finally giving up exactly at the wrong time.

As shown on the daily chart, prices are now close to the support of the blue trendline and it is therefore necessary for existing short positions to have close stops in place to lock-in the profits in case reversal happens. Fresh positional shorts should be avoided at current levels unless a severe selloff starts and take prices below 5550 levels. Nonetheless, the trend remains negative but we are cautious as a few index heavy weights have arrived at their crucial multiyear supports and there are positive divergences seen across the time frames in those stocks. Also a move up from here on Nifty will give positive divergence on daily and 60 mins chart as well.

Over short term, prices have closed near the day’s low and the upside Gap failed to sustain thereby maintaining our bias negative. As seen on 60 mins chart, prices broke the downward sloping channel on upside but re-entered into it. It will be extremely important to observe how prices move from around 5580 – 5600 levels on downside.

In short, our bias continues to be negative as prices have failed to show a blue bar since past 7 trading days but we will be cautious on short positions due to some loss of momentum on downside. However, only a move above 5700 will indicate positivity.

To view the daily charts and important levels on Nifty as well as blue chip stocks subscribe to "The Financial Waves" by Waves Strategy Advisors. For more information visit www.wavesstrategy.com or write at helpdesk@wavesstrategy.com. Call on +91 22 28831358 / +91 9920422202  

TATA MOTORS: JLR sales worry or Elliott wave counts?

TATA MOTORS: JLR sales worry or Elliott wave counts?

By Waves Strategy Advisors, For more information visit www.wavesstrategy.com To subscribe to daily equity research “The Financial Waves” write tohelpdesk@wavesstrategy.com or call on +91 9920422202 / +91 22 28831358

Tata Motors fell hard on 21st March 2013, but not for the reasons you probably have heard!

(Reuters) - Shares in Tata Motors end down 4.22 percent after falling as much as 5.6 percent on worries that China's new stringent fuel economy standard would adversely impact the auto maker's Jaguar Land Rover Ltd (JLR) unit.

Above news we read on 21^st March 2013 after equity market closed, giving the reason for a sharp fall in the stock. However, one day before the fall we have covered this stock in our daily equity report (The Financial waves) and predicted the fall with the help of advanced technical analysis i.e. Elliott wave counts, Fibonacci retracements along with momentum indicator and crucial levels. Below is the chart picked up from the equity daily report (The Financial Waves) which shows sharp fall in last two days (marked by eclipse) and currently quoting near day’s low of 266.80.

Tata Motors 120 mins chart:

Anticipated on 20^th March 2013:

Happened:

Waves Analysis:

Following is what we wrote before the news and positioned our readers on the short side -

Above stock is weekly chart of Tata motors, since last six trading sessions prices are consolidating between the narrow range of 280-310 levels. Yesterday, prices breached the crucial level of 280 and made an intraday low of 278.50. Momentum indicator price ROC exhibits the strong negative divergence.

As shown above in 120 mins chart, prices have ended minor wave c of wave ii near 310 levels and started the next leg on downside in the form of wave iii. Currently, prices are moving near the crucial level of 280. Generally, crucial levels are taken out with a gap. Hence, there is a possibility that a strong selloff can start if prices sustain below 280 levels.

Tata motors currently made a low of 268 and the news came when the stock was already down by more than 4.22% on 21^st March 2013.

Trading based on news would not have necessarily helped you to take trading decisions but technical tools and concepts like Elliott wave can help you to act before everyone else does. Think….That is where the difference lies!!!

To subscribe to this research visit www.wavesstrategy.com write to us at helpdesk@wavesstrategy.comor call us on +919920422202 / +91 22 288313588

Does monetary policy drives stock trends? Yes Bank: Elliott wave counts

Does monetary policy drives stock trends? Yes Bank: Elliott wave counts

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

RBI cut repo rate on 19^th of March 2013 by 25 bps. This was in lines with more than 95% of economists’ expectations and as per mainstreet experts, government focus on easing monetary policy should help in growth pickup.

If repo rate increase or cut would have been responsible for driving prices of Banking stocks up or down then the question to ask is Banking index and stocks have been rallying all the while from May 2012 to Jan 2013 when there was no cut in repo rates. Finally when RBI announced cut in rates in Jan 2013, Banking index made a high of 12960 and reversed exactly on same day from there. This time as well after the announcement of repo rate cut on 19^th March overall market started shedding gains.

This clearly indicates why it is not logical to apply government action to devise trading strategy but to use objective tools like Elliott wave to determine the trend of market. Below article shows how we applied such tool on one of the Banking stocks to capture short term trend –

Elliott wave counts and Head and shoulder pattern were in sync and helped us to capture the top for this stock precisely. Below is the chart picked up from the equity daily report (The Financial waves)

Yes Bank120 mins chart:

Anticipated on 1^st March 2013:

Yes Bank120 mins chart: Happened:

Wave Analysis:

We have mentioned in the previous update of 1^st March 2013, “Along with channel break out it has broke simple moving average of 50 days decisively. As long as 510 is protected on upside our favored view is negative. Move below previous day low of 465 will continue the downtrend and prices can retrace 50% of the prior wave C which comes near 430/425 levels”. BANG ON!!!

Yes Bank moved precisely as expected. Prices reversed exactly from the resistance of 510, broke the crucial level of 465 and made an intraday low of 430 in the previous trading session. Prices have achieved Head and shoulder pattern target which is 50% retracement of the prior intermediate wave C.

Do not rely on others for your trades. Look at the charts for yourself and take informed decisions. Equity research report “The Financial Waves” is published daily and gives research on Nifty along with 3 different stocks.

For more information visit www.wavesstrategy.com write to us at helpdesk@wavesstrategy.com or call us on +91 22 28831358 / +91 9920422202.

What is Elliott Wave Principle? How to apply it in markets?

What is Elliott Wave Principle? How to apply it in markets?

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

We always hear Elliott wave principle in the markets and many of them have also tried their best to learn or read this theory. The challenge that many faces are to practically applying it and how it looks on charts?

Freely traded markets are the only sources that reflect the collective behavior of humans and the current social mood. Highly liquid markets cancel out the random events and what is left is the social mood of the mass and that indicates what we can expect in the future. We believe that any freely traded markets like Equities, Forex, Commodities move in the form of repeatable wave patterns that exhibit fractal nature at various degrees. This behavior was first observed by Ralph Nelson Elliott in1930s and was later revisited by Robert Prechter in 1980s. This study of waves is now famously known as Elliott Wave.

If we can identify repeating patterns in prices, and figure out where we are in those repeating patterns today, we can predict where prices are headed in future.

How to begin applying Elliott Wave principle?

The Elliott Wave Principle works by identifying patterns in market prices. So, in other words, we start by analyzing waves on a chart. Patterns consist of Impulsive as well as Corrective waves.

 Elliott Wave Principle helps investors in deciding where to get in, where to get out and at what point to give up on a strategy. Trust us, it is worth the time and efforts learning this theory and you will be thrilled to see prices turn from the exact level you have derived. Wave counts with other technical tools like Fibonacci retracements, Indicators etc helps to increase accuracy of predicting the market.

An Elliottician is someone who is able to identify the markets structure and predict the medium term to long term view on markets using wave counts and wave patterns. By using the Elliott Wave Principle, we can identify the highest probable scenarios which in turn help in devising trading strategies.

To learn Elliott wave Principle and how to apply it practically register for our training sessions which are scheduled on 13^th – 14^th April 2013 in Mumbai. To know more details about the training sessions write to us at helpdesk@wavesstrategy.com or call us on +91 9920422202 / +91 22 28831358. Visit www.wavesstrategy.com

Applying Elliott wave counts on commodity - Lead

Applying Elliott wave counts on commodity - Lead

By Waves Strategy Advisors, For more information visit www.wavesstrategy.com To subscribe to daily Commodity research “The Commodity Waves” write to helpdesk@wavesstrategy.com or call on +91 9920422202 / +91 22 28831358

Along with precious metals we have observed steep move on downside in base metals within last two months (January – February 2013).

MCX Lead is one of the base metals which has reversed exactly from the crucial resistance level and fell violently. Elliott wave counts worked precisely and helped us to capture the top in this commodity.

After a steep fall from 135 to 120 we have covered long term wave counts on MCX lead in our daily commodity research report on 14th March 2013. Here, we have mentioned for a minor bounce back towards 124. Prices have moved exactly as expected. After making low of 120 it has re-tested the resistance of 124, thereafter it has started the impulsive move on downside and currently quoting near 118 levels.

MCX Lead Daily chart:

Wave analysis:

As seen above in daily chart of Lead, in January 2013 prices have retested the previous high of 135 which was made in December 2010, later prices failed to sustain above this levels and fell steeply. In last two months (January and February 2013) we have seen sharp move on downside, prices have breached the strong support of 124 and moved lower till 120.

As per wave perspective, prices have breached the wedge pattern in last month (February 2013), completed wave Z of complex Corrective pattern (W-X-Y-X-Z) near 135 levels and started the next leg on downside. At present, it is moving lower in the falling channel (marked by blue color). Momentum indicator RSI arrived near the support of 30 where earlier it has bounced back from the same level. Hence, after a steep move on downside there is a probability of re-test of the crucial level of 124.

From Medium term perspective, combination of Elliot wave theory and wedge pattern break out suggested the end of correction on upside which has started from level of 40 made in the year 2009. Therefore, any attempt on the upside will be utilized as a selling opportunity with a risk management level of 124.

In short, as long as prices move below 124 our favored is negative for a move towards..…..

We cover MCX Gold, Silver, Crude and Copper along with Comex Gold and Silver in daily commodity report (The Commodity waves STU). To subscribe to this research visit www.wavesstrategy.com write to us athelpdesk@wavesstrategy.comor call us on +919920422202 / +91 22 288313588

Nifty Elliott wave counts and trading strategy!

Nifty Elliott wave counts and trading strategy!

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

Nifty sharp movements on either side have provided very good trading opportunities. Intraday volatility is good for intraday traders but might be painful for positional traders as there is no net progress over few days.

In current market environment one has to be dynamic and switch between positional to intraday trades. Below article gives an overview of what we mentioned in our daily equity research report“The Financial Waves” and price movement with important levels.

Nifty 60 mins chart: shown on 14^th March morning before market opened

Happened as on close of 14^th March 2013

We mentioned on 14^th March 2013 morning report, “As shown on 10 mins chart, the move down from 5971 does not look impulsive and is contained within the red channel so far. Assuming that this channel will remain intact we can expect short term bounce back from near 5820 levels…”

Happened on 14^th March:Nifty moved exactly as expected. Prices moved down towards 5800 levels and moved below it but only momentarily and quickly recovered from the lows. It took the support of the red trendline shown on the 60 mins chart and bounced back steeply from there. We have shown a very similar path for Nifty in the previous update.

Mentioned in morning on 15^th March before markets opened:The current 60 mins chart, indicates the short term direction. After the sharp movements on either side over past few days prices can take a breather now and consolidate within a narrow range before moving higher towards 5935 – 5940 levels. 5940 is not only 80% retracement of the entire down move from 5970 to 5791 but also is the area of previous x wave which has always proved to be important turning points….

In short, Nifty can consolidate for next 2 days between 5870 – 5940 and should later resolve ……..

Happened today so far:Nifty made a high of 5945 and a low of 5862. Prices are currently 5892. Nifty has moved very close to the range we have mentioned.

Do not get panic with increase in volatility and wide swings. This can equally work in your favor provided important supports, resistances and strict stoploss methods are followed.

“The Financial Waves” daily research report is not necessarily for short term traders but also gives medium term perspective to markets. We do switch from short to medium term strategies based on market dynamics and clearly advise our subscribers about it. Also mentioned in today’s report our view on RBI monetary policy and how do we expect markets to react…

For Subscribing write to us at helpdesk@wavesstrategy.com or call us on +91 9920422202/+91 22 28831358 or visit www.wavesstrategy.com

Nifty: A classical Fractal Nature!

Nifty: A classical Fractal Nature!

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

Fractal Nature: We have mentioned below Fractal concept on 25^th July 2012. We are re-visiting that concept to explain the latest Fractal nature seen on Nifty.

Today’s morning equity research report published before the market shows latest example of this Fractal nature. Read ahead to know more about Fractals and its implications:

We, at Waves Strategy Advisors, believe in the theory that freely traded markets are patterned and exhibits fractal nature. This makes them behave in a predictable manner. By pattern we mean that there are certain structures that repeat itself from time to time and can be seen on charts that shows prices of any tradable instrument. The “Fractal Nature” is again an important concept which states that these repeatable patterns occur on varied time scales and can be seen on 1 minute charts to Daily charts to Monthly charts. Fractal structure is seen in nature across from DNA to snowflakes to galaxies and so it is also seen in stock markets which reflect collective emotions and social mood of humans.

Humans behave in a manner, when given a stimulus, in similar and probabilistically predictable fashion. This behavior of acting in similar ways makes us no different than the other creations of nature. Freely traded markets are the only sources that reflect the collective behavior of humans and the current social mood. Highly liquid markets cancel out the random events and what is left is the social mood of the mass and that indicates what we can expect in the future. We believe that any freely traded markets like Equities, Forex, Commodities move in the form of repeatable wave patterns that exhibit fractal nature at various degrees. This behavior was first observed by Ralph Nelson Elliott in1930s and was later revisited by Robert Prechter in 1980s. This study of waves is now famously known as Elliott Wave.

We identified this important Fractal formation in Indian stock markets on 13^th March 2013.

Nifty exhibits a classical fractal nature with prices showing similar pattern on 60 mins chart and 10mins chart. This is highlighted above which shows a clear double zigzag pattern (a-b-c-x-a-b-c) involving x wave that broke out of the channel at the centre of the trend. After completion of this pattern on 60 mins chart we can observe a sharp reversal on upside from 5664 levels and if prices are indeed following the fractal development to high extent we can expect similar path but of lesser magnitude since currently it is seen on 10 mins degree compared to previous 60 minsdegree. This further conforms to our path shown on 60 mins chart. Such developments are indeed a thrilling experience and are exactly the reason why patterns like triangle, wedge or H&S that work on daily charts work very well even on smaller degree charts… Let see over next few days if we are reading the market pulse correctly!!!

Subscribe to the daily equity research report and see yourself the combination of different concepts and wave theory to get high probable trade setups and crucial levels. For Subscribing write to us at helpdesk@wavesstrategy.com or call us on +91 9920422202/+91 22 28831358 or visit www.wavesstrategy.com

Nifty continues to move as per path ahead!

Nifty continues to move as per path ahead!

By Waves Strategy Advisors. To subscribe to daily research on Indian equity markets visit www.wavesstrategy.com or write to helpdesk@wavesstrategy.com

Five reasons why we were bearish on Indian Equity markets when Nifty was trading in the zone of 6050 – 6100 in January 2013!

As per advanced Elliott wave concept, no part of wave 3 should break the 0-2 line or else wave 3 should be considered over or wave 2 will be still ongoing. Now as shown on 60 mins chart, chances of wave ii is still ongoing in form of running correction is extremely less as wave ii has already consumed time more than 3 times wave i. So this leaves with only scenario that wave iii is over and wave iv is ongoing.

RSI has now confirmed negative divergence as shown on daily chart. All important tops or bottoms mostly form with negative divergences. Also as wave iii is showing strong negative divergence, chances are high that an Ending diagonal in 5^th wave is being formed and one minor push on upside will give triple divergence on RSI.

69 days Time cycles that we use to predict probable bottoms and tops (shown on Sensex before) confirms with wave counts that prices are due for a top.

Prices have so far retraced around 78.6% of down move from top of November 2010 near 6300 to the bottom at 4550 levels. We have seen before that this retracement level has proved extremely important for Indian markets.

We were aware about the few of technical reasons even before but what has changed since 1 day before is the break of 0-2 line on closing basis which happened yesterday. This rules out the probability of wave iii of 5 of C being an extended wave and keeps only 1 highly likely scenario of Ending diagonal being the most probable scenarios.

As we have mentioned before past 100 points of rally on Nifty has been sufficient for turning the sentiments extremely bullish with targets of 7000+ forecast by many brokerage houses and analysts. The final minor vth leg on upside will be sufficient to turn even more people on extremely bullish side over next 1 to 2 weeks. We will see this as negative sign.

Currently one minor leg up in form of wave vth is forming which can go towards 6050 i.e. 61.8% of wave iii or maximum 6100!

Nifty Daily chart:

Anticipated on 11^th January 2013: 

Happened:

Wave analysis:

We have been precise in capturing the top for the Indian Equity market. Prices have formed top at 6111 on 29^th January 2013, thereafter it has breached the wedge pattern (Ending diagonal pattern) on downside and moved lower till 5663. 5650 is the support level which was shown on11^th January 2013 report and recently prices reversed exactly from near the support level of 5663 and moved higher.

In the previous report we have mentioned strong resistance of 5970 level and prices have made high of 5971 and at present consolidating below the resistance level.

Combination of simple technical analysis, momentum indicators, Eliiott wave theory and Time Cycle helped us to predict the short to medium term movement objectively.

Do not get carried away in euphoria or news as they are the reaction after market movement. To know the next big trend of Nifty subscribe to our daily equity report (The Financial Waves short term update). For more information visit www.wavesstrategy.com or write us at helpdesk@wavesstaregy.com or call us on +91 22 28831358 / +91 9920422202.

Nifty took a "V turn" Look reaction at 5970 levels!

For more information on daily research report visit www.wavesstrategy.com or write at helpdesk@wavesstrategy.com

Bottom Line: Nifty had another Gap up opening on Friday. The short term trend remains positive.

Nifty daily chart:

Nifty 60 mins chart:

Wave Analysis:

We mentioned in previous update, “In short, the near term trend is positive to sideways. A move below 5800 will provide first confirmation that the downtrend has resumed. The current scenario remains valid as long as 5960 is not broken on upside.”

Nifty continued to show Gapping action on upside. Prices managed to open near 5884 with approximately 20 points gap up and started to pick up steam during second half of the trading session. Prices made a high of 5953 and closed near the higher end of the day. This continues to maintain the short term bias as positive.

RSI as shown on daily chart touched the level of 30 which was last seen in May 2012 before start of wave C from 4670 levels. This is another indication that the market dynamics that was valid from 4670 to 6110 has changed and the bigger trend has turned to down. However, we will not be too stubborn & will wait for prices to break below 5795 to confirm resumption of bigger downtrend.

As we keep mentioning, wave x normally provides important turning points or resistance to prices and prior wave X as marked on 60 mins chart comes near 5960 – 5970 levels. We will be closely observing how prices react from here. A decisive close above this zone will open up possibility for a move towards 6100 levels.

From wave perspective, the up move from 5664 levels has good momentum and is along with Gaps which is a typical characteristic of an impulse wave. However as seen on 60 mins chart, the move so far is perfectly channeled and contained within the blue trendline. A perfectly channelized move has higher chances of being corrective and not impulsive. Therefore we have conflicting signals and currently we have shown 1 plausible scenario as a-b-c with wave c = wave a at 5970. Prices are also near the upper end of the channel which should provide some resistance. 61.8% retracement of entire down move from 6110 to 5664 is placed at 5943 level where Nifty has closed.

In short, the near term trend remains positive but prices are near cluster of resistances which atleast should result into short term sideways action if not down. Such cluster of resistances if has to be taken out should be with a gap. Only a close below 5890 will indicate that the short term trend is probably changing from up to down. However a decisive close above 5960 – 5970 will continue the uptrend. 

For more information on daily research report visit www.wavesstrategy.com or write at helpdesk@wavesstrategy.com or call on +91 9920422202