Elliott with Point and Figure and different Time Scale!

Sensex

At times when markets are confusing and not doing what it is expected to do we try to find out smarter and more efficient ways of evaluating the on going market conditions

It is very much important for markets to behave in such a way as it helps to get the best out of a Researcher or a Trader or an Investor

If a trader / researcher proves its ability to tackle surprises he / she will be richly rewarded later as market does not always move in complex structures

Sensex chart today is shown in Point & Figure format, one of the ancient way of charting and not used extensively but is an amazing way of identifying potential support and resistance levels

As shown we are once again entering into a zone where cluster of Resistances are acting together

P&F also helps us to identify Elliott wave counts which can sometime be difficult on a line or a bar charts

MACD is showing strong negative divergence here. (This is different than MACD plot on normal time scale)

Please note the "TIME SCALE". It is very different than what normally everyone follows.

P&F changes the timescale based on steepness of trend or areas of consolidation

Time is just a Relative component and we should go beyond the acceptance of standard calendar to measure dates

There are many different ways and many countries have their own traditional ways of measuring the dates and months like a Hebrew Calendar, Islamic Calendar, Persian Calendar Egyptian Calendar. But to standardize, everyone across the globe follows one single calendar

We need to go beyond this standard practice as there can be a time scale that can better explain stock price movements. This is still an untapped Research area!

Tweak your time scale and you can find out a technique no one would have ever thought of: Just think !

Wave 2 continues during Budget session!

Sensex

Time cycles were suggesting a bottom in early week of March and rally in form of wave 2 / B but it looks prices formed a bottom 2 weeks earlier
Time cycles sometimes work pretty accurately and a few times it can be deceptive and keeps us guessing. But it always provide a way of caution at times when Mr. Market is not moving as expected
Budget Euphoria: The first one hour of Budget did not produce much movement in Sensex and everyone thought Union Budget will be a non event as Railway Budget
When maximum number of traders become complacent, Mr. Market has a tendency to take them by surprise and that exactly what happened. Prices started moving up very fast during the last 30 mins of Budget
There was no major announcement that would have caused a spike up but please be aware that news does not drive markets, prices can sometime behave as per news but will surely resume the major trend sooner than later
A move below 16000 - 16150 would confirm start of wave 3 till then sit and relax for wave 2 to get over!

Sensex - Daryl Guppy view! Synergies Elliott view

Daryl Guppy view

Elliott view

Sensex

Daryl Guppy Moving average method is very interesting to watch
This method uses a cluster of short term moving averages and cluster of long term moving averages
Whenever all the short term moving averages move above each and every long term moving average one can initiate long position and whenever each and every short term moving average moves below all long term moving averages, a short can be initiated as it indicates reversal in trend
Looking at the Sensex chart above requires little explanation and it is for the first time since March 09 that all short term moving averages have moved down below long term moving averages
Also please note that how Long term moving averages cluster together after which major trend reversals happen
Elliott Perspective
Elliott wave counts shows an impulsive down
This counting does not looks good from aesthetic point of view but it is an acceptable count where wave 3 and wave 5 are exactly equal
It is difficult to say at this point whether we completed wave A down or it is just wave 1 of A. Only time will help us to clarify this
The top on 17th at 16480 is likely completion of wave 2 / B up
In our previous blog we mentioned if prices rally then 16500 should provide excellent opportunity to go short, prices touched 16480 and reversed
This offers very good place to initiate shorts with stop loss of 16481!
Caution: Do not be surprised, if we see very steep impulsive move down from here in coming weeks with major supports failing

Selloff continues!

Sensex


Sensex is exhibiting very weak structure
One of the probable counts show 1-2, 1-2 formation. If this count is valid prices shall now move down very fast in next couple of days
The other plausible count is that 5th wave of A is extended
Either which ways the intermediate trend is clearly down and very shallow pullbacks suggest very weak internal structure
As we said in our previous blog, Metals are going to be worse performers - BSEMetal index has moved down substantially since then. If market cracks from here expect drastic move down in this space
If price reverses from here and rallies, 16500 should offer excellent opportunity for shorting!

Ready to fall off the cliff!

Sensex


As we said, an impulse down has started!
We expect volatility to drastically increase as prices move down
The market structure looks extremely weak with recent corrective wave failing to reach even 38.2% levels
Rally in last 4 days are clinging to the lower boundary of ending diagonal which is acting as a very strong resistance level
First support should now come in at 15400 - 15500 levels
Please be prepared as there is a good chance of prices moving down very fast!