The following research was published today morning before equity markets opened in "The Financial Waves Short term update" by Waves Strategy Advisors. This report has daily 3 stocks along with Nifty outlook using Elliott waves. For subscription please visit http://wavesstrategy.com/index.php/store.html.
Bottom Line: Nifty had a range bound
movement after strong gain of Thursday. A weekly close above 5950 important for
positivity!
Nifty daily
chart:
Nifty 60 mins
chart:
Nifty
bearish possibility:
Wave Analysis:
In previous
update we mentioned that, “In
a nutshell, a failed H&S pattern suggests that the short term trend is now
positive with medium term trend also remains positive. Positional long traders
should now use 5800 as crucial level on downside and we can see upside levels
of 6040. The monthly forecast published yesterday also shows Price to Book
ratio and Price to Earnings ratio of Sensex and why we think Indian markets are
not expensive. In fact, PB ratio
currently stands near 2003 levels!!!”
Nifty closed
the previous week near higher end of the candle. On weekly basis we have yet to
see a close above previous candle’s high. The high in previous week was at 5950
and a weekly close above 5950 will induce further positivity.
Revisiting
volumes – Over past 2 days we can see how volume has increased with the uptrend
and approached near the average line whereas during correction the volume
continued to be subdued. I am not too strong follower of volumes but at times
when there is a perfect rhythmic movement in this parameter along with price it
is not worth ignoring. The day we will see volume reducing with up move it will
be first sign of weakness but as long as volumes are increasing with uptick in
prices the trend will be positive.
During this
downtrend from 6140 to 5700, we have seen Smallcap and Midcap sectors
outperforming. Even when Sensex and Nifty broke previous pivot lows the broader
market continued to sustain.
We are showing
an important blue channel on daily chart that is connecting the lows at 5118 an
5700. This looks to be a very important channel and as long as this remains
intact our view will be positive. Move below 5800 will not only break this
channel but will also fill the Gap area created on Thursday. So existing long
positions, should keep this as a strict stoploss as move below it can open up
downside targets for 5640. At the same time trend keeps changing every 2 to 4
days and so position sizing should be done accordingly.
As shown on 60
mins chart, the last segment of minor wave (a) is retraced in faster time
thereby confirming that short term trend is now positive. A move below 5800 in
faster time will be first sign of weakness. As long as this does not happen we
can expect a move atleast towards 6040 or probably higher. We are also showing
a short term blue channel which has immediate support near 5860.
In short,
looking at volumes, channels, faster retracement of last falling segment our
view continues to be positive with important support at 5800 on downside. However
the current uptrend is now 2 days old and we will see if it can continue beyond
2 more days or not since trend has been changing every 2 to 4 days. A move
above 5950 will resume the uptrend and on upside we expect to see 6040 levels.
Note:
“The Financial Waves Monthly
Update” is now published. It has touched upon following: Sensex in Gold - real money gives
correct picture of why majority of stocks are at new lows! Bank Nifty relative chart along with Nifty which shows that why Banking
sector as a whole should underperform
for months to come. Sensex PE ratio and PB ratio why
Indian markets are not expensive, USDINR
path, US markets and Government shutdown impact, L&T long term forecast with
probable bottoming levels, Silver
secular bear trend in force!
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Silver, Larsen & Toubro, Fundamental ratios – PB ratio, PE ratio, GDP
growth chart. To subscribe visit http://wavesstrategy.com/index.php/store.html
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