Monday, October 20, 2014

Why US market – DJIA is at very crucial juncture?

An insight into US major index – DJIA - Global markets have continued to be under turmoil over past few weeks without any strong negative event.
It is prudent to look at the long term charts to understand the short term counts when prices reverse from crucial junctures. We are therefore showing the weekly chart of DJIA that represents the entire movement post 2000 onwards.
DJIA Weekly chart:
DJIA daily chart:
Wave Analysis:
As shown, prices have reversed from the important trendline resistance which has been connecting the tops of 2000 and 2007. The recent whipsaw around the same trendline and a sharp move on downside confirms the major trend might be either topping or already topped out.
The up move from 6470 is probably forming primary degree wave (X)that is internally moving in double correction on upside. An X wave connects two standard corrections together. The internal counts of this wave (X) suggest that prices have probably completed intermediate degree wave (c) of second standard correction.
5% Shifted 30 period Exponential Moving average: We have applied 30 period Exponential Moving average but shifted it by 5% which has been acting as very important support and resistance to prices since 2002 onwards. Prices are now kissing this important displaced average line and a decisive close below it will be a strong indication that the intermediate top is in place.
Series of RSI divergences: The turn in prices is accompanied by series of negative divergences on the momentum indicator which is providing secondary negative confirmation. Now a lower low and lower high formation on the weekly scale will be a strong negative indication.
Short term outlook:The daily chart of DJIA shows the rise in form of intermediate wave (c) has been Ending diagonal pattern. UK major index – FTSE has already achieved the downside projection post the breakout from the Wedge pattern. The start of wave (c) on DJIA is from 12500 in late 2012. If the wedge pattern is indeed complete than we can see a sharp selloff across the US stock market. Sharp fall in US treasury yields is also indicating flight to safety.
In short,we are keeping  a close watch on US equity markets and a breakdown in DJIA will be a first indication that we are revisiting the 2008 scenario all over again! The most important level is15350 which is the low of wave iv.
At times it is important to see the Global markets since during period of uncertainty the correlation between various asset classes increases drastically. It will be very crucial to keep an eye on DJIA togauge the overall momentum across world markets.   
For subscription to Global research report or indepth research on Indian markets visit http://www.wavesstrategy.com/index.php/store.html or Contact us at helpdesk@wavesstrategy.com, +91 28831358 / +91 9920422202

Friday, October 17, 2014

Nifty & Global Selloff: Is this the beginning of 2008 AGAIN! DEJAVU!!!

Bottom Line: Nifty broke below the previous important low and closed deeply red. An important top might be in place!

The below research is published in morning report "The Financial Waves short term update" that gives complete insight into advanced Elliott wave counts on Nifty and stocks with other basic technical analysis tools applied. For subscription visit http://www.wavesstrategy.com/index.php/store.html

Nifty weekly chart:

 Nifty daily chart:
Nifty 60 mins chart:                                                    
Wave Analysis:

Nifty finally gave away the support zone of 7815 – 7840 and closed near 7748 levels. It had flat opening in morning and entered positive territory for a while amidst strong global selloff. Prices touched an intraday high of 7894 and moved in a narrow range until 1 pm. Post that as soon as 7840 level was broken the selling pressure started increasing and break below previous pivot low at 7796 resulted into severe selloff across the board. Midcap and Smallcap indices lost 2.4% and 2.7% during final hour of trading. The structure had been similar to that of US equity index – DJIA that started the fall in an overlapping fashion but later break of crucial support intensified the pressure. A similar possibility has now opened for Nifty as well.

Medium term outlook: Weekly Time cycles has worked perfectly so far that hinted towards October being a topping pattern and then the selling pressure to intensify. This time we are showing the weekly chart since 2008 onwards. As mentioned earlier the correction that started in 2008 is still not over and ongoing in the form of a running triangle pattern. A few stocks like DLF, IDBI, ADAG group, etc has retraced almost or entire of the up move prior to elections. This has further confirmed our corrective wave labeling on the upside which is difficult to digest for a normal technician. However, Elliott wave suggests that even when the index is at new high it can still be a part of correction due to irregular behavior or running correction. The overall pattern and wave characteristic takes precedence to that of the internal counts. Running triangle pattern clearly confirms this scenario with wave [D] probably complete at the high of 8160 and currently wave [E] has started. A monthly close below previous month’s low at 7840 (that is already broken for now) will be a strong negative confirmation. If after the Global odds prices still manage to cross back above 7970 then it will only indicate few more weeks of positivity before we top out. The medium term trend has already reversed or is very near to do so!

Short term outlook: A sideways and range bound action on Nifty over past few days had kept the structure and pattern difficult to predict. During such times use of crucial support and resistance levels is the key to get the confirmation for direction of breakout. Yesterday prices broke below the previous support zone of 7815 and closed deeply negative. This indicates a downside breakout. Also the positive divergence seen on hourly chart is no longer valid since prices did not confirm.

We will come out with downside projection once we see a follow-up negative weekly close that will further hint towards start of wave [E] on downside. Short term moving average has continued to stay below 20 days average and as long as we do not see a positive crossover bias will stay negative.

Volatility on a rise: Volatility has continued to increase and this can be just a beginning. During down moves we can expect sharp deviation of prices from the mean which is the primary reason for rise in volatility. One needs to stay in direction of trend which is down as of now in case a big trend emerges and follow trailing stop method.

Nifty hourly chart shows that the current down move can be wave c or wave iii with wave b ended as a running double correction in form of w-x-y (red). A close below yesterday’s low near 7730 will break the channel on downside whereas a close above 7850 will indicate completion of c near yesterday’s low. Short term pattern has continued to be challenging given the overlapping formation and one needs to use prudent risk management level unless a clear impulsive trend emerges. For existing shorts below 7790 level use 7850 as trailing stoploss.


In short, break below 7800 confirms the negative bias and follow-up move below 7730 can intensify the selling pressure similar to that of Global markets. The correlation will increase across the asset class and global equity markets and a repetition of 2008 cannot be ruled out. A monthly negative close below 7840 will add more weightage to this scenario! Stay alert and use prudent risk and money management strategies to make the most of the trend which might just be starting!!! Move back above 7850 will indicate a false break…

For subscription to Equity, Forex, Commodity and Global research reports and advisory visit http://www.wavesstrategy.com/index.php/store.html. Contact us at +91 22 28831358 / +91 9920422202 or write to us at helpdesk@wavesstrategy.com for more information.

Friday, October 10, 2014

Nifty volatility on a rise, Time to sit tight and look at crucial levels!

Bottom Line: Nifty showed sharp reversal yesterday and touched intraday high 7972. Close above this level will indicate one final push on upside before we top out!

The below research is published in "The Financial Waves short term update" daily research report by Waves Strategy Advisors. For various subscription options visit - http://www.wavesstrategy.com/index.php/store.html

Nifty daily chart: 

Announcements:

“The Financial Waves Monthly Update” is now published. The current research focuses on Why we are still skeptical and not stating the current trend as start of BULL TREND and how different sectors perform during one Complete Economic Cycle. Understanding India Government Bond 10 Year yield chart. CESC exhibits good opportunity from investment perspective and long term path of the same is explained as per Elliott wave theory. Comex Silver Medium term outlook. EURUSD path ahead and It is important to see the Emerging market index in order to identify how the emerging economies are doing globally.  

Subscribe monthly research report “The Financial Waves Monthly update” by visiting http://wavesstrategy.com/index.php/store.html and see yourself the long term forecasts and world markets at a glance.


Nifty 60 mins chart:    

Wave Analysis:

Nifty had a Gap up opening near 7887 and sustained it throughout the day. This has happened after prices whipsawed around 7840 level but managed to close above it. Such scenarios at times can be challenging from trading perspective and so closing basis movement becomes important. We also published an interim update yesterday around 2.00 pm indicating that the one final push on upside is probably pending given the fact that index managed to sustain the morning Gap and the participation was seen across the board.

As shown on daily chart, prices are now exactly at the blue Moving average and a close above this average followed by break of 8030 will be an indication that the upward intermediate c wave is ongoing and the low made at 7816 was only wave b. Topping patterns are made on hopes and bottoming patterns are made on fear or panic. It takes time for hopes to dissipate and so it becomes difficult to identify patterns near important tops. It is therefore difficult to conclude with high probability that wave c of third standard correction on upside is complete or it is still ongoing. For important tops to be in place we should see sharp reversals on downside. Nifty retraced most of the prior down leg in single day and thereby failed to show sharp down move. Going by this logic it means that one final push on upside might be pending. However, it will be very crucial to see a close above 7970 levels followed by break of 8030 to confirm this scenario.

As shown on 60 mins chart, the move on downside is not impulsive and has happened in overlapping fashion indicating a-b-c correction instead of impulsive move. Prices have now closed exactly on channel resistance near 7970. For uptrend to resume close above this level will be crucial. As the participation was seen across the board but it will be too soon to conclude that the uptrend has again resumed by looking at just one day of rally. Let us see if the positivity continues in broader market even today or tomorrow for confirmation.

In short, a move back below 7840 will indicate that the complex correction on downside is still ongoing whereas close above 7970 will confirm one final push on upside is pending. It is better to wait for prices to confirm in which direction it wants to head before making a conclusive stand on wave structure!  

For subscription to daily research report visit http://www.wavesstrategy.com/index.php/store.html that has Nifty and three different stocks. Contact us at helpdesk@wavesstrategy.com or call on +91 22 28831358 / +91 9920422202

Tuesday, October 7, 2014

View on Sensex this week, published in Economic Times section of NBT

Sensex moving in a range awaiting fresh triggers!
The below is the English transcript of article by Ashish KyalCMT Director of Waves Strategy Advisors in Economic Times section of Navbharat Times.
Over past few weeks Sensex has been moving in a range of 26220 and 27350 levels and closed at 26560 in previous week. We can see good profit bookings at higher levels above 27000. This can also be a result of fair valuations that Indian equity market has arrived after the sharp rally that began in September 2013. The best performing sectors in this rally had been IT, Pharma and FMCG. These sectors have still managed to attract buyers at higher prices in expectations that the future earnings will be much better. With the start of earnings season many investors will be closely watching the results of IT major Infosys to get clues on their future guidance and it should act as short term trigger for clear trend.
RBI continued to maintain the key policy rates at higher levelsand has emphasized that they are not looking forward to cut the interest rates anytime soon. The reason being, if FED (USA) starts increasing the interest rates in 2015 this can result in short term volatility and increase the risk as short term liquidity will reduce. In India, there are some signals of easing inflation but it seems RBI will not cut interest rates unless inflation is seen below their target zone.
Sharp rally in US Dollar a concern:Another important factor which is a concern for commodities and commodity driven stocks is the sharp rally in US Dollar over basket of currencies. US Dollar has increased sharply over past few months against EURO and has still not showed any signs of reversal. This has led pressure on not only Bullions – Gold and Silver but other commodities as well.
Looking at Technical indicators: Along with fundamentals, it is very important to look at the technical indicators in order to understand the clear trend and important levels that act as crucial support and resistance. Sensex touched the high of 25375 on 16th May 2014 after the election results were announced. Currently prices closed at 26567 in previous week. This is less than 5% increase in almost 5 months. It is an indication that the upside momentum has reduced and only specific stocks that have promising earnings delivery have attracted investors. Weekly momentum indicators are also showing some negative divergence which is a cautious signal over medium term. The long term trend still remains positive but one should not be surprised to see short to medium term correction.
Week ahead: Sensex formed a low of 26220 in the month of September 2014. This is not only a monthly low but also a quarterly low level which should act as an important support. A close below this level can be concerning over short term. On upside 27000 continues to attract profit booking. So for upside trend to emerge sustainability above 27000 will be required. As long as these levels are intact we can expect range bound movement to continue in week ahead!
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Wednesday, October 1, 2014

IFTA: Applying Elliott Wave and Time Cycles to Understand the Trend of DJIA – U.S. Equity Market by Ashish Kyal,CMT

Below article was published in International Federation of Technical Analysts (IFTANewsletter in their September Issue

(Click on the image for readability)

Waves Strategy Advisors offer various services across Equity, Commodity, Global and Forex segment. Daily research report, Intraday/ Positional advisory, Long term forecast on Global Markets an Training on Advanced Technical Analysis concepts like Elliott Wave, Time Cycles.


Attend the 2 days training workshop that will provide in-depth analysis on Advanced concepts of Elliott wave – Neo wave and how it can be combined with Time cycles. This is one of themost advanced training in technical analysis. It focuses not only on Price but also on Timewhich is an important element for any trader or investor. There are no shortcuts to Trade or Invest profitably. It comes with lot of research, psychology, objectivity, tested methods. The above study ensures increasing the probability of success while trading and also highlights the area when one should be patient and avoid taking positions. Making money is one thing but to preserve what is made is the Key to trading success!!!
Register before 15th September 2014 to avail Early Bird Offer and confirm your seat today!For registration visit http://www.wavesstrategy.com/index.php/free-articles/trading-lessonsa-education/1005-training-on-neo-wave-a-hurst-time-cycles-in-mumbai.html or call us on +91 22 28831358 / +91 9920422202 or write to us at helpdesk@wavesstrategy.com      


Monday, September 29, 2014

Is there a link between Stock market & Spectacular speech by Mr. Modi at Madison square!

Bottom Line: A spectacular speech by Mr. Modi, our honorable Prime Minister at Madison Square – USA.
Probably the collective growth agenda and execution is going to coincide with April 2015 – a crucial juncture of Time Cycles lows for a path of unprecedented progress in real economy!
Nifty weekly chart:

Announcement 

Training on Advanced concepts of Elliott wave – Neo wave and how it can be combined with Hurst’s Time cycles. 
This is one of the most advanced training in technical analysis. It focuses not only on Price but also on Time which is an important element for any trader or investor. There are no shortcuts to Trade or Invest profitably. It comes with lot of research, psychology, objectivity, tested methods. 
Making money is one thing but to preserve what is made is the Key to trading success!!!

A truly inspirational speech by Mr. Modi at Madison square with a vision of inclusive growth by a nation having the power of “mouse”! I cannot resist myself for stating it here but there is a link between such a rational shift in the thought process and the craving for change within Indians that happened after 30 years by electing a party with such huge majority.
Stock market is a tool to measure the social mood of masses.A period of sideways correction from 2008 to 2013 clearly reflected a period of anxiety and negative social mood during which there is strong rational shift in the thought process of people at large.
People tend to choose extremist during such times which can be probably one of the reasons of creating history after 30 years! Mr. Modi is now attracting record followers and exhibiting prudent leadership by initiating the revolution of fight for inclusive growth in a complete different way. I am neither a politician nor an expert and does not believe in favoritism but a true capitalist and developed economy is not possible without making the majority of population a part of it! I believe Sensex – an indicator that leads the economy is indeed moving towards61000 mark by 2019(a conservative target with clear technical justification given in monthly updates). However, it will not be a one way trip and there will be reactions or corrections to this uptrend one of which we might witness between …….. 2014 and ………….. 2015 before our journey towards 61000 starts! And as Mr. Modi rightly said it will be the people of India that will drive the economy on the growth trajectory and not a single person alone!!!
Subscribe now to our daily Equity Research Report – Nifty and 3 Stocks and Monthly Research Report- Long Term Forecast on Markets and get instant updates. To subscribe visit http://www.wavesstrategy.com/index.php/store.html

Thursday, September 25, 2014

Impact on equity markets: Supreme Court verdict on Coal blocks!

The Supreme Court on Wednesday cancelled 214 of the 218 coal blocks allocated by the successive governments since 1993 and gave the companies awarded coal licenses six months to wind up their operations.
Yesterday was an eventful day for the markets and Nifty reacted lower as soon as the announcement came out. However, later both Nifty and Sensex entered managed to enter into green territory even when the news was perceived as bad for majority of PSU Banks and Power stocks.
A person simply looking at the index might be surprised to see a positive tick from lower levels which do not seems logical at the face of it. The other argument can be contribution from defensive stocks that helped index to end higher despite the negative news but trust me the news would have given too much weightage to the event if Nifty would have ended deep in the red. Case in point is news will change based on the market direction and not the other way around.
Equity markets are discounting the future and are thriving to see ahead whereas the news or events can be a part of past actions. Stocks of companies most impacted have already been falling well before the ruling of Supreme Court. Events can produce short term spikes or movement that will last for few minutes, few hours or few days but eventually the major trend of the market resumes.
So how to trade using objective techniques and which techniques have proven its validity despite all the news and events?
Now look at the below chart of Nifty with Path shown:
Nifty daily chart as on 4th September 2014:
Blue lines on above chart show the direction of trend over next few weeks.
Now look at the below chart and see what has happened as on 24th September 2014
The above chart clearly reflects the movement in synchronization with the path ahead shown in first chart. It also reflects the simple techniques of Channels, Moving averages, RSI combined with some knowledge of Elliott waves. Don’t you think if one knows the path of the trend not necessarily the exact levels it will save you lot of mental and emotional energy when Nifty moved by more than 100 points on upside but then to reverse back down another day with huge volatility?
The above path is not a hypothetical example but was published in actual research report on 5thSeptember 2014 to our subscribers. Even when Supreme Court announced its verdict on Coal blocks in the morning itself following was published in the report yesterday “the trend for now is sideways to negative but prices can manage to close above 8000 ……. On downside 7940 will be very crucial and only a move above 8180 will resume the uptrend. Let us see if prices continue to adhere to the path first shown on 5th September as it has obliged us so far!”
After the verdict, Nifty made a low near 7950 levels and finally closed at 8002 yesterday itself!!!
In a nutshell, it is better to use objective techniques mentioned above than to rely on news outcome for taking trading or investment decisions.Subscribe NOW to “The Financial Waves short term update” and see what we expect from here on.For subscription options simply visit http://www.wavesstrategy.com/index.php/store.html and we will deliver reports to your mailbox on daily basis.
Want to learn the techniques applied to get high accuracy trade setups by yourself?
Attend the 2 days training workshop on most advanced training on Technical analysis – Neo wave (advanced Elliott wave) along with Hurst Time cycles and start seeing the markets from a different perspective! For more information contact us at +91 22 28831358 / +91 9920422202 or write to us at helpdesk@wavesstrategy.com

Monday, September 22, 2014

Nifty: Why knowing prior patterns is important for predicting future path ahead?

Bottom Line: Nifty consolidated after the sharp up move on Thursday. Weekly bar has failed to take out the high of previous week above 8180 which will be crucial for positivity to continue!

The below research is published today in "The Financial Waves short term update". For subscribing to this research on daily basis visit http://www.wavesstrategy.com/index.php/store.html 

Nifty daily chart:

Announcement 

Training Workshop in Mumbai

Attend the 2 days training workshop that will provide in-depth analysis on Advanced concepts of Elliott wave – Neo wave and how it can be combined with Time cycles. 

This is one of the most advanced training in technical analysis. It focuses not only on Price but also on Time which is an important element for any trader or investor. There are no shortcuts to Trade or Invest profitably. It comes with lot of research, psychology, objectivity, tested methods. 

Making money is one thing but to preserve what is made is the Key to trading success!!!


Nifty 60 mins chart:     

Wave Analysis:

In previous update we mentioned that “Sharp down move followed by sharp rise can result into increase in volatility and becomes difficult to comment on sustainability… one should wait for clear higher highs and higher lows formation on hourly scale for getting a good risk reward ratio & trade setup!”

Nifty had a range bound movement on Friday between 8105 and 8160 levels. This movement came after the huge gains of Thursday that was a sharp reversal from the lows of 7925 levels. Many analysts are attributing for sharp rally of Thursday is contributed to FED stand of keeping the rates at record low levels. But the point is Indian markets had a Gap down opening on Thursday itself and if FED would have been the reason for strong performance than we should have seen a strong Gap up in opening hours. News usually follows the market movement that looks logical on the face of it but might not be completely accurate. Case in point is that it is better to adopt techniques like Time cycles and Elliott wave that hinted towards maturity of downtrend rather than betting on news else Nifty would not had a Gap down opening on Thursday.

Now coming back to charts, the weekly bar created in previous week had formed a lower high below 8180 and lower low compared to that of earlier week. It will be very crucial for move above 8180 for the current up move to be sustainable. Also as pointed out earlier many of the stocks are still struggling after the selloff of 16th September and so far have not formed a good base which is important for sustainable up move. To name a few stocks that has given up most of its Thursday gains are SBI, IDBI, ADAG group stocks, Yes Bank, L&T, Reliance Industries, Infosys, etc. Also note that these stocks are spread across different sectors that have retraced most of the upside move of Thursday. The point is even if Nifty touches new highs above 8180 levels the number of stocks participating is less. This is a typical characteristic during 5th or c wave formation. So the wave personality is also hinting towards topping pattern rather than a strong momentum on upside from here atleast for now. We will keep a close tab on the overall breadth and sectors to further gauge the momentum as and when 8180 is broken on upside.

Nifty has continued to move as per the path first shown on 5th September 2014 and we continue to stick with this scenario as of now. Over short term, the up leg from the low of 7940 can be first leg of wave c but since the reaction was steep without any meaningful base formation so we can see a pull back towards 8050 – 8060 levels before the uptrend can continue. This pull back can be sharpas shown by past history and also seen during the bounce back of August & November 2013. On other hand if prices manage to take out the highs of 8180 it will resume the uptrend in form of wave c of second correction.


In short, there is possibility of short term pull back towards 8050 – 8060 levels before the up move can resume. Nevertheless, break above 8180 will continue the current uptrend but should be with lesser momentum and number of stocks participating can eventually reduce!

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Thursday, September 18, 2014

Nifty path ahead - Why is it important to combine Elliott wave with Time cycles?

Many analysts or traders believe it is better to keep the techniques simple and easy to apply.
But the problem is when markets are moving in complex structure and with sharp reversals it becomes important to combine the advanced concepts together with basic techniques to get high probability trade setups. The movement shown on below chart is an answer to the critics of technical analysis that believes the study produces random effect. See yourself the below chart of Nifty that was published on 5th September 2014 that clearly showed the path we expect prices to follow.
Nifty daily chart published on 05th September 2014 in morning research report
 Happened as of today:
On 5th September 2014 following was published in the morning research report:
On daily chart, we are showing a probable path for next few weeks on Nifty. This is indicating that the overall trend can remain sideways to positive. One minor push on upside from here will complete wave a of second correction. Post which we can see downside pressure for 2 weekstowards 7980 level and then the final leg on upside in form of ……. will be completing a very important pattern. This is a tentative path and more price action from here on will provide further validity. For now, use crucial levels mentioned below from trading perspective.
Happened: Nifty moved exactly as per the trend shown. The magnitude of correction was overshot two days back but it has still been on track with the minor arrows shown on daily chart. For a trader touching the exact levels should be secondary but knowing the important turning areas with respect to time and when to avoid taking a wrong trade is very important! Novice traders probably wait for the exact level to be touched rather than focusing on the overall trend scenario and understanding the maturity of movement.
Elliott wave with time cycles solves many of the mysteries of price movement and equip you with the tool to forecast the markets irrespective of the news or major events!
To see what we expect next from here and if the final trend on upside has started with such sharp reversal or this is just a trap Subscribe NOW to “The Financial Waves short term update”!!!
Attend the 2 days training workshop on Advanced Elliott wave - Neo wave and Hurst Time cycles. In this training we are going to discuss about the important tools that helped us to predict the movements as shown above in the daily chart and why we are of view that markets are approaching the ultimate crucial levels very soon! For more details Contact on +91 22 28831358 / +91 9920422202 or write to helpdesk@wavesstrategy.com.