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Elliott wave on Copper!

On 23^rd April we published article on Copper is due for a trend!  And mentioned that prices are trading at matured stage and the uptrend is due.

Prices moved in line with our expectations after completing time correction. Let’s see what we had published in 23^rd April, 2014

MCX Copper 60 mins chart (June Contarct) on 23^rd April, 2014.

Waves Analysis:

For MCX Copper, in tandem with other base metals prices moved higher and managed to close near day’s high level. Up move was very well backed by depreciation in INR currency pair against the US Dollar. Looking at the Comex Copper structure there is very high likelihood that prices will move higher and weakness in INR will aid positivity in the up move.

As shown in 60 mins chart, after ending wave iii near 395 level prices were moving in sideways and it was more as time correction which ended near 415 near in the form of wave iv. After that we witnessed sharp fall towards 400 level and looking at the recent up move there is very high likelihood that prices have ended wave v near 400 levels in the form of truncation. However, we do not have any price confirmation so far. Any decisive break of 415 followed by close above the same will indicate that wave v has ended near 400 levels and we can expect deeper retracementof prior down move. On downside 408 level will act as immediate support.

Looking at Comex Copper structure and overall weakness in INR there is very high probability that prices will break the 415 levels. Positional trader should wait for positive prices confirmation.

In short, on downside 408 level will act as important support and we can expect move towards 415 in coming trading session and any move above the same will provide positive price confirmation and we can expect some trending move in coming trading sessions!

MCX Copper 60 mins chart (June Contarct)

To capture a next trend in MCX Copper along with MCX Gold, MCX Silver and MCX Crudesubscribeto our short to medium term analysis report “The Commodity Waves Short Term Update” which is published on daily basis before the Commodity markets open. For more details about our offers visit http://www.wavesstrategy.com/index.php/offer-of-the-month.html or Pricing page.

View on Sensex in Economic Times section of Navbharat Times

view on Sensex in Economic Times section of Navbharat Times

Trade cautiously during Election season

Sensex in Election month:

Indian equity markets have showed good performance over past 3 months. The rally is majorly attributed to markets discounting a clear majority or a stable government in the current elections which will help government to take quick and fast steps on increasing the infrastructure spending, clearing the pending projects and brining growth back on track.

 

On 16th May 2014 the election results for LokSabha will be announced. The volatility can tremendous on that day and one should trade very cautiously. If there is no clear majority we can see a very sharp decline across the board. 

 

Futures & Options: In the previous expiry on 23rd April, the rollovers of Futures contract were below average and it is clearly reflecting reduction in risk by traders and smart investors. Options are instrument used by well informed market participants to hedge their risk and form risk averse strategies, shows the combined premium of both Call and Put has increased drastically to nearly 500. This reflects that there is a possibility of movement by nearly 7% on Nifty in current month expiry.

 

Volatility index: Indian Volatility index (VIX) that measures the risk or market’s expectation of volatility over near term. This index in April rose from near 17 levels to as high as 38 few days back. In lay man terms, the index is reflecting a huge fluctuation possible due to Election event in current month so again Trade cautiously!

 

USDINR movement: Among all this events and wide fluctuations, currency market looks to be in stable mode. The movement of USDINR has reduced over past few months which is a good sign for both exporters and importers. In current month as well we can expect a range bound movement between 59.50 and 61.50 levels.

 

Sensex path ahead: Over short term the fall of Friday was sharp so in current week some consolidation between 22200 and 22950 is possible. Also momentum on upside has reduced as investors are getting cautious. During times of uncertainty sectors like IT and Pharma has outperformed and so we can expect these sectors can be relatively stable. Banking and interest sensitive sector can show wide fluctuations due to the event. Proper risk management strategy will be important over next few weeks to avoid any major financial loss!

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How to use Andrews’ Pitchfork channel technique?

Technical analysis has different ways of drawing a channel. A simple channel is drawn by connecting the pivotal lows and a parallel line from the tops when the trend is on upside.

On other hand during a downtrend it is important to connect the tops together with a trendline and then projecting a parallel line on downside. These are simple ways of drawing a channel but experience is required to predict which channel prices are going to follow in future.

Another way to draw a channel is using Andrews’ Pitchfork method. As per this method a median line is drawn connecting pivotal levels and 2 equidistant lines are drawn around this median line. The below example shows Andrews’ Pitchfork line on Nifty which was first published on 23^rd April 2014 morning research report “The Financial Waves short term update”

Nifty daily chart:

(a few wave counts are deleted from the above chart but shown in original report)

We are showing Andrews’ Pitchfork Channel on daily scale. This channel has a median line and 2 equidistant lines around it. Looking at the movement post w wave from March 2014 onwards prices are moving exactly within this red channel and found support near the central median line. Also please note that since the trendline is sloping on upside the resistance will keep on increasing higher with each passing day.

One more black channel is drawn by connecting the major lows of 5118 and 5980 levels and a parallel line from the highs of wave a. The resistance as per this channel ………We will visit this black channel if prices break above the upper trendline of Andrews’ pitchfork near ………. On other hand, if 6700 is broken it will challenge the median line and will result into short term reversal.

In addition to channels we also use Elliott wave counts, momentum indicators, Moving averages to determine the trend. Subscribe “The Financial Waves short term update” and get access to the entire research during this volatile month of Elections! For subscription options visit http://www.wavesstrategy.com/index.php/store.html or Contact us at helpdesk@wavesstrategy.com 

Wise Investment = Huge Returns

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Election impact: Why is DLF underperforming?

Election impact: Why is DLF underperforming?

Indian equity market already looks to be celebrating the election outcome and expecting NarendraModi to be the next PM.

It seems expectations are high and next 6 months will be extremely crucial to see if Modi Sarkar, given the opportunity, is able to deliver or not. In prior election Nifty and Sensex had a circuit up closing in expectation of UPA government to deliver and this time the pre – election rally has been strong enough so far in expectation of NDA government to deliver. Case in point is the emotions that are going to elect the prime ministerial candidate this time are similar to emotions that are driving the prices of stock market. The 6 long years of bear market since 2008 onwards are clearly reflecting the frustration and strong emotional sentiments prevailing among the masses. Post such long period of sideways correction people wants radical change and it can clearly be seen with the slogans ongoing across the street “ABKI BAAR MODI SARKAR” We are not promoting or endorsing our preferences here but simply highlighting shift in Emotions which is currently seen!

Coming back to Equity market, a stock that has clearly underperformed and gave away the gains of rally is DLF.

After touching the highs of 185 the stock has been moving lower and has now given away exact 61.8% of its prior gain. The reason why this stock has not participated is again related to the event – ELECTIONS OUTCOME. It is assumed or rather predicted by equity market victory by BJP. During such scenario DLF that is speculated to have links with Vadra, connected to an extent with existing ruling government, will be the major loser in real estate space. Now, trading based on news will not yield any return because it does not help with timing and who knows to what extentDLF will suffer that too if opposing party forms the government. There is lot of “IF” associated for someone speculating based on news.

Even during such times it is better to stick with charts that show how prices have been moving and the crucial support levels. Above 60 mins chart of DLF, clearly reflects that prices are moving in downward sloping red channel and as long as this simple channel is intact trend continues to be negative. Break above 160 will be first sign of reversal which will indicate that the traders are now giving up on the news based speculation. On other side break below 150 will extend the downtrend further as it will break the Fibonacci 61.8% level as well! This information should be used to trade objectively rather than speculating the many “IFs”

Trade objectively and systematically, technical analysis and Elliott wave might not be always give expect output but it atleast has the ability to give objectivity to the trading decision with crucial risk management and stop levels, If you are wrong be out with short losses and trust me when you get on the right side of trend it will pay off for your hard work and money. It is better to base your trading decision on objective techniques rather than speculating on mere news or event outcome! Subscribe “The Financial Waves short term update” and see yourself the crucial levels which will decide the trend ahead on Nifty and stocks! Contact US for more details.

What is wrong with India VIX? Understanding Nifty pattern!

What is wrong with India VIX? Understanding Nifty pattern!

Volatility index (VIX) measures the complacency or anxiety of traders. We have been keeping a tab on this index for quite sometime to understand the medium term indication. On 17^th April morning research report we published the following:

As mentioned earlier VIX has still continued to rise and has now reached above 31 levels. This level was previously seen in August 2013 and during the fall of 2011. An important observation is that this time VIX is increasing not with the down move but has reached this level during the entire up move from 6100 to 6815 levels. Also as can be seen on the above VIX chart there is absolute no interruption in trend. Food for thought is NSE started VIX futures trading from 26^th Feb and the index was then at 13.50 levels. It is difficult to digest an uninterrupted rise from 13.50 to 31 levels that too along with up move in Nifty exactly after the launch of VIX futures. Is it a mere coincidence or the traders are simply pushing VIX higher without any justification? Normally a rise of such magnitude is a strong warning sign for rally but …….

VIX has jumped today as well by 25% and touched the highs of 38 in morning session. Trade Cautiously! However, it also becomes important to understand the pattern Nifty is forming in order to get high conviction trade setups.

Nifty and Volatility index index: data as on 17^th April

Nifty 60 mins chart:

Elliott wave analysis:

From trading perspective it is very important to understand the pattern. Following is probably one of the patterns Nifty is forming mentioned in today’s morning research report:

Nifty managed to protect 6650 level on Thursday and reversed back above 6720 very quickly. Little respect for important resistance levels like 6720 – 6750 indicates a triangle formation. Triangles are very challenging to trade and break important trendline supports and resistance but just to move in sideways action without producing any desired impact. Similar behavior is observed currently. Firstly prices broke below the month long blue support channel on Wednesday and then again moved back above this and immediate resistance levels. So there is high likelihood a triangle pattern is under formation.

In addition to above we have also show Elliott wave counts with alternate possibility along with Time cycles and other indicators like Bollinger Bands®. A special Video update about Nifty is also released explaining the current market scenario.

Subscribe to the equity report “The Financial Waves short term update” and get insight into where Indian markets are currently placed. Also get 1 hour of FREE training video on Elliott wave for 3 months subscription and also a special video explaining Nifty current position! Visit http://www.wavesstrategy.com/index.php/store.html for more details.

Video introducing Equity research report

Overview on our flagship product - The Financial Waves short term update covering Nifty and 3 stocks. Services offered by Waves Strategy Advisors. For more details visit www.wavesstrategy.com

Infosys result announcement but moved as per Elliott wave!

Infosys announced its 4th quarter results yesterday. In morning itself before the announcement we published our view on this stock with key levels to watch. Today morning we published crucial levels and direction of TCS. To subscribe to this daily equity research report "The Financial Waves short term update" along with view on Nifty visit http://www.wavesstrategy.com/index.php/store.html

Infosys Daily chart: 

Infosys 120 mins chart:

The below article is picked up from daily research report published on 15th April 2014 morning before Equity market opened.

Wave Analysis:

          

IT bellwether Infosys quarterly result is due today. From the start of March 2014, stock has corrected from 3850 to 3160 levels and currently arrived near the crucial levels. The big Gap in middle is when Infosys declared the quarter from Jan to March 2014 can see subdued growth. So the negative news should already be factored into the price.

As shown in daily chart, from mid April 2013 prices started to move higher in form of impulsive structure. During this span, stock started its journey from 2200 levels and touched life time high of 3850 in mid of March 2014. After that, prices showed sharp correction and hovering near 38.2% retracement level of the prior up move. Even in the Friday’s trading session, stock momentarily broke this important level but later recovered sharply from the lows.

As per Elliott wave perspective, the down move from the highs is clearly divided in 5 waves and the stock is trading at the matured stage of correction as RSI indicates positive divergence. However at current level, we do not have any positive price confirmation.

As shown in 120 mins chart, prices have been moving in the downward sloping red channel and in last trading session, stock exactly closed at the resistance of the channel. As per wave perspective, any faster move above 3280 followed by 3360 levels, will suggest that wave a is complete and wave b started on upside. Money Flow index is showing triple positive divergence and also arrived near the level of 20 from where it has reversed many times. However, any move below 3150 level will suggest extension of correction.

In short, Infosys is trading at make or break level. Any move above 3280 will break ii-iv trendline in faster time and provide first positive confirmation and break above 3360 will open up further positive possibilities towards 3580/3600 levels.

To subscribe to this daily research report along with view on Nifty subscribe to "The Financial Waves short term update". Visit http://www.wavesstrategy.com/index.php/store.html for more details.

Sensex weekly update in Economic Times section of NavBharat Times

Weekly Outlook on Sensex by Ashish Kyal, CMT of Waves Strategy Advisors in Economic Times section of Navbharat Times. 

Sensex Movement:

Sensex continued to move higher over past few weeks and has managed to achieve the mark above 22500 levels from the lows of 20000 seen in early February 2014. The strong performance came from PSU Banks and interest sensitive sectors. The major trend as of now remains positive as long as 22000 level is protected.

Relative Performance:

The relative performance shows that since February 2014 Bank Nifty & Realty index has strongly outperformed. PSU banks like SBI, PNB, Bank of Baroda has given very strong returns. During the same period IT, Pharma and FMCG were laggards and underperformed Nifty and Sensex. The rally this time is led by high beta stocks and sectors which shows increase in risk appetite and is a positive indication.

Result season: Technology companies have underperformed and the eye will be on Infosys results to be declared today. On 13^th March Infosys shares fell by nearly 9% as company expected poor growth in January – March quarter. It will be important to see IT major results today along with future growth forecast which will set the tone for other IT companies. Better than expected result and guidance might help IT index to recover from the worse performing sector over past few months.

Impact of IIP data: Index of Industrial production data was declared on Friday evening after equity markets closed. The data was disappointing and came at -1.9 % against consensus estimates of 0.9. This data is for the past performance and markets try to discount the future. So we think this might have some negative impact but only for short period of time and then the major trend which is currently up should resume. WPI and Inflation data to be declared will also result into short term volatility on markets. It will be important to see if markets can rally on back of negative news which will indicate strong positive sentiments.

Decline in Gold and Silver imports: Gold and Silver imports declined by nearly 40% in 2013 – 14. This can be contributed by the steps taken by Government by ways of import duty but also to the underperformance of Gold over past many months when the prices have constantly fallen. During this period, the commodity futures volume has fallen by 40% and Volumes on Gold futures also fell by nearly 25%. This clearly indicates lack of interest by market participants in Gold that has given strong returns until 2013 for a decade. It seems Indian love for Gold is on a decline.

In a nutshell, this week will be very crucial due to start of Election voting, result season along with Inflation data and impact of Global market. Sensex has very important support of 22200 levels on downside. Any move above 22800 amidst all the events will resume the uptrend strongly and index will again touch new life time highs. Trade cautiously during this period of events!

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Nifty Fractal nature and impulse wave possibility

The below gist is a part of "The Financial Waves short term update" published today morning. To view the complete report with detailed analysis and Elliott wave counts subscribe now by visiting http://www.wavesstrategy.com/index.php/store.html 

Bottom Line: Nifty showed strong momentum yesterday and closed at life time high levels. If this is indeed an impulse wave the rally should continue atleast for few weeks more from here!

 Nifty 60 mins chart:

Nifty 60 mins: Scenario 3 - Strong Bullish possibility

Wave Analysis:

Nifty had a Gap up opening of nearly 30 points and prices managed to protect the Gap which is seen after a long time. As mentioned earlier there was never a Gap up opening which was not filled until yesterday. The strong performance was seen in the 2^nd half when the index rallied by almost 100 points in mere few hours and decisively took out 6775 levels on closing basis. The strong momentum seen yesterday along with Midcap and Small sectors up by more than 2% is suggesting there is much more room left on upside and understanding different scenarios has become extremely crucial.

The weekly chart with 2 possibilities ......Nifty daily chart shows 2 different plausible counts.  (shown in actual report)

Nifty 60 mins chart shows all the 3 different scenarios very clearly. The 1^st chart shows either an ongoing complex correction or an impulsive move and wave v has started. The problem with this Scenario 2 is that both waves ii and iv are very similar running correction. 

Fractal Structure: The structure and pattern looks exactly same and such behavior is known as Fractal nature of markets. For a valid impulse structure wave ii and wave iv should alternate in as many ways as possible and over here there is only time alternation i.e. wave iv has taken more time compared to wave ii but the pattern, complexity and structure looks very similar. This increases the odds and need for Scenario 3 details of which are as follows:

Scenario 3: This is a very important scenario and is fitting the confusing environment very well. In our previous update we highlighted about a possibility of running correction. There is high likelihood that this running correction is wave 2 and wave 3 on upside has just started. Also none of the indicators were giving buy signal because wave b of 2 was ongoing in form of running correction (A running correction has wave b traveling much beyond end of wave a and wave c truncating above the start of wave a). Also this wave b of 2 produced strong negative divergences on hourly scale and market obliged by falling from near 6750 to 6650 levels (however minor the fall is the indicator did produce its impact and now its outcome is complete). Minor wave c was only 100 points which was retraced yesterday in merely 3 hours. The indicators didn’t give buy signals all the while from 6550 to 6750 as the momentum was slow and overlapping as it was wave b. This synchronizes the indicators, channeling move and wave counts. Also wave 2 has taken exactly same time to the point as wave 1. So if this is indeed start of wave 3 next 1 week should see strong Gap up moves which are unfilled during the day. 

From trading perspective, ............In a nutshell, the short term trend is ......................

To see the detailed analysis on Nifty and 3 different scenarios along with stocks like Reliance Industries that is not in news for its movement but probably will be the next leader subscribe to "The Financial Waves short term update" daily research report by visiting http://www.wavesstrategy.com/index.php/store.html or Contact US

USDINR: Predicting as per Elliott wave theory!!

The below article is picked up from "The Financial Waves Forex update" by Waves Strategy Advisors. For subscription to this report visit http://www.wavesstrategy.com/index.php/store.html

On the back of upside rally in Indian markets which touched life time highs in the month of March 2014, USDINR appreciated and moved lower towards 60 levels. 

If we see, the movement of USDINR from last 2 months is very much like sideways to negative action. During this environment, trading becomes challenging as big moves and high volatility disappears from the market.

In the past we observed that whenever USDINR appreciates, on the back of it news come that RBI have been selling dollars and taking various steps to prevent the rupee fall. On the other side when its starts to depreciate, then again media come to the domestic factors like CAD, Fiscal Deficit, etc. has been increasing and things like that. Now, question arises is this really important from trading perspective? Trading requires objective techniques rather than betting on luck or news!

We have been applying Advanced Elliott wave theory with basic technical analysis on various asset classes. Below research was sent to our paid subscribers of “The Forex Waves Short Term Update” dated 26^th March 2014, where short term path for USDINR was shown.

Anticipated on 26th March, 2014:

USDINR 30 mins chart spot:

Happened on 2^nd April, 2014:

USDINR 30 mins chart spot:

As expected, On 2^nd April 2014, prices exactly made lows at 59.95 levels which we anticipated earlier and bounced back sharply on upside. This sharp move on upside has taken less time. So, what will be the next trend in USDINR. To ride the next wave of INR Pairs and get short to medium term forecast subscribe to “The Forex Waves Short Term Update” now and avail 30% discount on annual subscription. For more information visit pricing page.

Nifty scenario analysis!

The below article is picked up from "The Financial Waves short term update" by Waves Strategy Advisors. For subscription to daily research reports visit http://www.wavesstrategy.com/index.php/store.html

Bottom Line: Nifty continued to have a Gap up opening, fill it on intraday and close near the highs. Nifty other scenario analysis shows alternate possibilities as even Reliance Industries has now closed above 950 levels! 

Nifty Weekly chart: Scenario analysis 

Nifty daily chart: Scenario 1

Nifty daily chart: Scenario 2

 Nifty 60 mins chart: as per Scenario 1

Wave Analysis:

In previous update we mentioned that“Market reaction to RBI policy will be crucial. This time bond yields have actually eased from near 9% to 8.88% indicating there should not be any rate hike. In short, the trend is positive as long as prices does not close below 6630 – 6650. Volatility can be high based on above mentioned event and Time cycle today.”

Interestingly, consecutive for 5 trading sessions Nifty had a Gap up opening with respect to previous day’s close and fill it almost instantly or within first few hours. Yesterday was no exception. Nifty opened near 6730 level with a Gap of around 26 points and immediately turned flat. The trading happened within the range of 6675 and 6730 but the intraday volatility was high as expected.

RBI maintained its status quo and did not change key policy rates. This was in lines with majority expectations but still Bank Nifty started showing weakness and closed more than a percent lower. The high made by Nifty during opening hour was exactly on the hourly cycle.

As shown on daily chart, prices have still not formed a lower low nor close below previous day’s low. As long as this structure is intact the trend will remain positive. Close below yesterday’s low near 6670 will be first sign of weakness. We are also showing Moving average difference indicator. This is a very simple tool to measure momentum. Any strong trend will result into short term average moving away from the longer term average. After the trend has run its course the short term average will mean revert and return back to the long term average. This will create a rhythmic expansion and contraction movement in this indicator. However, as shown the current up move from 6490 has failed to move this short term average sufficiently away from the bigger average and so we are getting series of negative divergence on this indicator.

As shown on hourly chart, RSI has continued to produce series of negative divergence and the upside momentum has been faltering. Unless we see break above the blue channel the current wave structure that prices are in wave c of 3^rd correction remains valid. Break of 6630 will further confirm this scenario.

In short, so far the trend is up as Nifty still did not close below previous day’s low. If the reversal does not happen in this week we will have to change various existing parameters since it will indicate the market dynamics valid since 2008 has now changed!

The daily research report contains Nifty and 3 different stocks with applied Elliott wave counts and short to medium term directions. Please visit http://www.wavesstrategy.com/index.php/store.html for subscription options or register for free trial! For more details Contact US