Is broader market headed for another crash! Here is the reason!

I am aware everyone is looking for buying opportunities but looking at the overall breadth and deterioration in high beta stocks I am concerned that we might be heading for another major decline similar to that seen in first week of February!

See yourself how we predicted the fall of February 2018. Below is an excerpt from our monthly research report

Nifty Midcap index showed an exponential rise in year 2017. However post making all time high near 21840 it has moving towards lower level. It is important to know what will be the next move of this index to know which stock to invest into. 

Nifty Midcap weekly chart (Anticipated on 9th January 2018)

Nifty Midcap weekly chart Happened:

The below is from the latest monthly research report – The Financial waves monthly update

In earlier update for Nifty Midcap index published in the month of Jan 2018 we mentioned “the euphoric rise of Nifty Midcap index is expected to witness consolidation, if not reversal, at the levels of 21700 based on the equality relation of wave 1, wave 3 and wave 5”.The index behaved precisely as we predicted; it turned back from the levels around 21700 and cracked by approximately 16%. This simply shows power of forecast and despite of all the euphoria this index did not do anything and reversed back sharply in March. In month of April there has been some positive attempt but prices are yet to retrace 61.8% of the prior fall.

The number of stocks that are helping Midcap index to move higher has been limited. There have been on most of the occasion’s more stocks declining rather than advancing which remains a sign of concern. We are not applying the stringent rules of Neo wave and the counts are shown as per valid Elliott wave methods.

As shown on weekly chart, Wave III ……….

The onset of wave IV has brought the prices back to the steep black channel. Prices broke the blue channel which was containing entire wave III and now the upper trendline of the black channel is getting tested again. Given the sharp rise with a sharp reversal there is possibility that the high near 21700 will not be taken out and prices should ideally also re-test the lower trendline of the channel which is near ……… levels. This will also be ……..% retracement of the entire rise that started in 2016 from 11400 levels.

Sharp decline that was seen in this index in last week of January and early February simply shows how vulnerable midcap stocks can be during systematic collapse. It is therefore important to have a diversified portfolio of stocks from this space.

In a nutshell, ……

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