Indices
Thursday, February 13, 2014
INDICES:
IF NOT NOW THAN NEVER-II:
(Will it be Repetition of 90’s Bear Market or not????)
Sensex closed @20448.49 & Nifty closed @6084 levels on 12.02.2014. It has achieved my short term targets levels on both sensex & Nifty as per market outlook. It made a low of 19963.12 & 5933.80 levels on sensex & nifty respectively on 04.02.2014 & retraced around 38.2% in this pull back rally. As mentioned on my earlier note on this page on 30.01.2014 titled “IF NOT NOW THAN NEVER”. Market finally confirmed down side breakout.
Now what?
Elliot wave is a tool through which we can do market forecast for medium to long term perspectives. It gives both alternates i.e. Bullish & Bearish at very beginning stage till we get level wise final confirmation eventually for directional Trend. From my experience wave Count & momentum combination works very well to choose alternates at early stage. At current scenario also I analyzed 2 alternates as below till we get level wise final confirmation (i.e. completely discards of bullish alternates) in this first phase of recent fall from TOP of 6415.25 levels on Nifty & 21483.74 levels on sensex.
Bullish Alternates:
From bottom of Aug 2013 lows (i.e. - 17448.75 on sensex & 5118.85 levels on nifty), we formed leading diagonal & recent correction is Expanding flat (3-3-3) or (3-3-5) as per chart attached.
Then Market will bottom out some where in the range of 5970-5880 levels on nifty
& for sensex that comes to around in the range of 19826-20137 levels & we will start wave-III UP of Bull market for completely new territory & new higher levels targets of 24200 levels on sensex & 7300 levels on nifty in medium to long term.
Close below 5875 on nifty & 19826 levels on sensex will finally conclude that recent rally was corrective only & part of bear market only & we are heading for lower levels targets in medium to long term.
Bearish Alternates:
We have completed Triple zigzag corrective rally of bear market at recent high as mentioned above from bottom of December 2011 (i.e- from low of 15135.86 levels on sensex & 4531.15 levels on nifty) in five fold W-X-Y-X-Z a per chart attached. And we may see recent correction also in five fold as per chart attached till it achieves final levels targets in the range of 14700-15100 levels on sensex & 4530-4350 levels on nifty.
It has five folds of support zone on nifty is 5700-5300-5100-4800-4500 & similar levels on sensex are 19264-18160-17448-15748-15135 in this correction.
If I compare current bear market with 1990, then it looks very similar & interesting as per chart attached. In other words, it looks like mirror image.
1990, bear market lasted for 4 years which is similar to recent case & formed a DOUBLE TOP kind of pattern as per chart attached.
Global market also looks in corrective mode & Rupee is going to depreciate further against USD till it trades above $60 levels in medium term, will also put additional pressure on market.
Conclusively, as mentioned above, Wave Count & momentum combination works well at the beginning stage to select preferred alternates. At current scenario, momentum is negative, therefore, going with bearish case as my preferred one.
And finally conclude TREND REVERSAL, once completely ruled out Bullish option i.e. close below 5875 on nifty & 19826 levels on sensex as mentioned above.
I would recommend that one should be cautious & stock specific at current levels of market. One can book stock specific gains & short in any kind of Pull back rally till
Medium term Trend reverses as per market outlook.
In this correction, some stocks which already bottom out may out perform, consolidate & continue to do well irrespective of main index.
21484 & 6415 levels on sensex & nifty respectively reversal levels for this positional view at current levels till we get any further advance indication or confirmation of TREND REVERSAL.