Friday, February 3, 2012

EOD Analysis For 3rd February 2012 and Outlook For 6th February 2012

Pretty much a topsy-turvy session for most part of the day with rangebound action and then we had the last 90 minute spike. OI in Nifty futures pretty much unchanged from yesterday and VIX marginally above 24.

Being a Weekly close this was critical [each weekly closing has been above that of the previous one in the last 4 weeks] and today is the 4th consecutive close above the 5177-5196 band and we can expect this to hold out on Monday as well on closing basis. However, to sustain further upside, more volumes are needed [can come with shorts in the system as well]

Critical levels and outlook remain unchanged from the last 2 posts.

As I had mentioned earlier, 2 consecutive weekly closes above 5250 and will be forced to believe that 4531 was indeed the bottom for the bear market on Nifty. If next Friday's close also goes above this that will be the complete confirmation.

Just an EW Perspective for the Alternate Bullish Count

As Raghuji and SMO also mentioned in their blogs that we can take the upside from 4531 as the start of the bull market - this is very much possible but would like to draw the attention of both bulls and bears to one point here basis wave personality /amplitude [Reference: Chapter 2 / Page 79]

[A very nice EW/Fibbo perspective for the recent price action has been given in as well]

Whatever the final end of this upside from 4531 [will be the Intermediate Wave1] when falls will be triggered, if it is indeed the start of the bull market, then one can expect a 61.8% to 90% drop of this rise.

Here bulls should not lose hope and bears should be aware that it is just a back-test of the rise and should gear up for the next powerful Wave 3 that will be wonders to behold.

Unless we close below 4880, the hopes of plugging the gap-ups won't be revised; unless 4690 is broken on closing basis, panic won't enter the system.

Pardon me for repeating this on a daily basis but I see a lot of Puts being bought in desperation without adherence to Hedges/Stop Losses and all that this will do is erode trading margins.

From an investment perspective, we have always maintained that sub-4800 levels are good to accumulate NiftyBees, BankBees and some specific stocks in a staggered and systematic fashion.

Global Market Updates:

Dow: As mentioned in the DJIA Paradox section, the rise beyond 12600 certainly has had a lot of people foxed [including me] and if DJIA takes out the 2nd May 2011 top of 12873, then the next assault will be at 13200 in all likelihood. Initial sign of weakness only with a close below 12200 on a weekly basis and 1280 on SnP500

FTSE: Initial signs of weakness only with 2 consecutive closes below 5550.

DAX: Initial signs of weakness only with 2 consecutive closes below 5750.

Euro-Dollar: Targets remain unchanged at T1 = 1.25 and T2 = 1.185 but 2 consecutive closes above 1.325 and this will need to be revisited.

For those who have academic interest, there is a very nice article on about the perils of having bad fundamentals and a hot stock market.

Interesting Read Indeed:

Enjoy your weekend - next update on Monday EOD

1 comment:

shriram said...

kidar naye bull market ka baat kiya beta ?

This bounce was a technical delight... Rounding bottom or CnH wotever one wants to call, was a clear REVERSAL on ST, but EW is making us go ahead of ourselves..

Esp some of the Alt lables r scary, one of them shows a MONSTER EXPANDED C wave pending to the DOWN .. Another says this may be a sub frac of a MONSTER IMPULSE UP!!

See the dichotomy?? Thats y i m pro keeping EW only as a tool for reconfirmation & do ur primary analysis with simple TA.

May not look like rocket science, but gaav ki gori ki sadagi ke saamne sheher ki chikni chameli humesha bheeki lagti hein ;-)

thoda araam se le :-)