Wednesday, April 16, 2014
Infosys announced its 4th quarter results yesterday. In morning itself before the announcement we published our view on this stock with key levels to watch. Today morning we published crucial levels and direction of TCS. To subscribe to this daily equity research report "The Financial Waves short term update" along with view on Nifty visit http://www.wavesstrategy.com/index.php/store.html
Infosys Daily chart:
Infosys 120 mins chart:
The below article is picked up from daily research report published on 15th April 2014 morning before Equity market opened.
IT bellwether Infosys quarterly result is due today. From the start of March 2014, stock has corrected from 3850 to 3160 levels and currently arrived near the crucial levels. The big Gap in middle is when Infosys declared the quarter from Jan to March 2014 can see subdued growth. So the negative news should already be factored into the price.
As shown in daily chart, from mid April 2013 prices started to move higher in form of impulsive structure. During this span, stock started its journey from 2200 levels and touched life time high of 3850 in mid of March 2014. After that, prices showed sharp correction and hovering near 38.2% retracement level of the prior up move. Even in the Friday’s trading session, stock momentarily broke this important level but later recovered sharply from the lows.
As per Elliott wave perspective, the down move from the highs is clearly divided in 5 waves and the stock is trading at the matured stage of correction as RSI indicates positive divergence. However at current level, we do not have any positive price confirmation.
As shown in 120 mins chart, prices have been moving in the downward sloping red channel and in last trading session, stock exactly closed at the resistance of the channel. As per wave perspective, any faster move above 3280 followed by 3360 levels, will suggest that wave a is complete and wave b started on upside. Money Flow index is showing triple positive divergence and also arrived near the level of 20 from where it has reversed many times. However, any move below 3150 level will suggest extension of correction.
In short, Infosys is trading at make or break level. Any move above 3280 will break ii-iv trendline in faster time and provide first positive confirmation and break above 3360 will open up further positive possibilities towards 3580/3600 levels.
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Tuesday, April 15, 2014
Weekly Outlook on Sensex by Ashish Kyal, CMT of Waves Strategy Advisors in Economic Times section of Navbharat Times.
Sensex continued to move higher over past few weeks and has managed to achieve the mark above 22500 levels from the lows of 20000 seen in early February 2014. The strong performance came from PSU Banks and interest sensitive sectors. The major trend as of now remains positive as long as 22000 level is protected.
The relative performance shows that since February 2014 Bank Nifty & Realty index has strongly outperformed. PSU banks like SBI, PNB, Bank of Baroda has given very strong returns. During the same period IT, Pharma and FMCG were laggards and underperformed Nifty and Sensex. The rally this time is led by high beta stocks and sectors which shows increase in risk appetite and is a positive indication.
Result season: Technology companies have underperformed and the eye will be on Infosys results to be declared today. On 13th March Infosys shares fell by nearly 9% as company expected poor growth in January – March quarter. It will be important to see IT major results today along with future growth forecast which will set the tone for other IT companies. Better than expected result and guidance might help IT index to recover from the worse performing sector over past few months.
Impact of IIP data: Index of Industrial production data was declared on Friday evening after equity markets closed. The data was disappointing and came at -1.9 % against consensus estimates of 0.9. This data is for the past performance and markets try to discount the future. So we think this might have some negative impact but only for short period of time and then the major trend which is currently up should resume. WPI and Inflation data to be declared will also result into short term volatility on markets. It will be important to see if markets can rally on back of negative news which will indicate strong positive sentiments.
Decline in Gold and Silver imports: Gold and Silver imports declined by nearly 40% in 2013 – 14. This can be contributed by the steps taken by Government by ways of import duty but also to the underperformance of Gold over past many months when the prices have constantly fallen. During this period, the commodity futures volume has fallen by 40% and Volumes on Gold futures also fell by nearly 25%. This clearly indicates lack of interest by market participants in Gold that has given strong returns until 2013 for a decade. It seems Indian love for Gold is on a decline.
In a nutshell, this week will be very crucial due to start of Election voting, result season along with Inflation data and impact of Global market. Sensex has very important support of 22200 levels on downside. Any move above 22800 amidst all the events will resume the uptrend strongly and index will again touch new life time highs. Trade cautiously during this period of events!
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Thursday, April 10, 2014
The below gist is a part of "The Financial Waves short term update" published today morning. To view the complete report with detailed analysis and Elliott wave counts subscribe now by visiting http://www.wavesstrategy.com/index.php/store.html
Bottom Line: Nifty showed strong momentum yesterday and closed at life time high levels. If this is indeed an impulse wave the rally should continue atleast for few weeks more from here!
Nifty 60 mins chart:
Nifty 60 mins: Scenario 3 - Strong Bullish possibility
Nifty had a Gap up opening of nearly 30 points and prices managed to protect the Gap which is seen after a long time. As mentioned earlier there was never a Gap up opening which was not filled until yesterday. The strong performance was seen in the 2nd half when the index rallied by almost 100 points in mere few hours and decisively took out 6775 levels on closing basis. The strong momentum seen yesterday along with Midcap and Small sectors up by more than 2% is suggesting there is much more room left on upside and understanding different scenarios has become extremely crucial.
The weekly chart with 2 possibilities ......Nifty daily chart shows 2 different plausible counts. (shown in actual report)
Nifty 60 mins chart shows all the 3 different scenarios very clearly. The 1st chart shows either an ongoing complex correction or an impulsive move and wave v has started. The problem with this Scenario 2 is that both waves ii and iv are very similar running correction.
Fractal Structure: The structure and pattern looks exactly same and such behavior is known as Fractal nature of markets. For a valid impulse structure wave ii and wave iv should alternate in as many ways as possible and over here there is only time alternation i.e. wave iv has taken more time compared to wave ii but the pattern, complexity and structure looks very similar. This increases the odds and need for Scenario 3 details of which are as follows:
Scenario 3: This is a very important scenario and is fitting the confusing environment very well. In our previous update we highlighted about a possibility of running correction. There is high likelihood that this running correction is wave 2 and wave 3 on upside has just started. Also none of the indicators were giving buy signal because wave b of 2 was ongoing in form of running correction (A running correction has wave b traveling much beyond end of wave a and wave c truncating above the start of wave a). Also this wave b of 2 produced strong negative divergences on hourly scale and market obliged by falling from near 6750 to 6650 levels (however minor the fall is the indicator did produce its impact and now its outcome is complete). Minor wave c was only 100 points which was retraced yesterday in merely 3 hours. The indicators didn’t give buy signals all the while from 6550 to 6750 as the momentum was slow and overlapping as it was wave b. This synchronizes the indicators, channeling move and wave counts. Also wave 2 has taken exactly same time to the point as wave 1. So if this is indeed start of wave 3 next 1 week should see strong Gap up moves which are unfilled during the day.
From trading perspective, ............In a nutshell, the short term trend is ......................
To see the detailed analysis on Nifty and 3 different scenarios along with stocks like Reliance Industries that is not in news for its movement but probably will be the next leader subscribe to "The Financial Waves short term update" daily research report by visiting http://www.wavesstrategy.com/index.php/store.html or Contact US
Friday, April 4, 2014
The below article is picked up from "The Financial Waves Forex update" by Waves Strategy Advisors. For subscription to this report visit http://www.wavesstrategy.com/index.php/store.html
On the back of upside rally in Indian markets which touched life time highs in the month of March 2014, USDINR appreciated and moved lower towards 60 levels.
If we see, the movement of USDINR from last 2 months is very much like sideways to negative action. During this environment, trading becomes challenging as big moves and high volatility disappears from the market.
In the past we observed that whenever USDINR appreciates, on the back of it news come that RBI have been selling dollars and taking various steps to prevent the rupee fall. On the other side when its starts to depreciate, then again media come to the domestic factors like CAD, Fiscal Deficit, etc. has been increasing and things like that. Now, question arises is this really important from trading perspective? Trading requires objective techniques rather than betting on luck or news!
We have been applying Advanced Elliott wave theory with basic technical analysis on various asset classes. Below research was sent to our paid subscribers of “The Forex Waves Short Term Update” dated 26th March 2014, where short term path for USDINR was shown.
Anticipated on 26th March, 2014:
USDINR 30 mins chart spot:
Happened on 2nd April, 2014:
USDINR 30 mins chart spot:
As expected, On 2nd April 2014, prices exactly made lows at 59.95 levels which we anticipated earlier and bounced back sharply on upside. This sharp move on upside has taken less time. So, what will be the next trend in USDINR. To ride the next wave of INR Pairs and get short to medium term forecast subscribe to “The Forex Waves Short Term Update” now and avail 30% discount on annual subscription. For more information visit pricing page.
Thursday, April 3, 2014
The below article is picked up from "The Financial Waves short term update" by Waves Strategy Advisors. For subscription to daily research reports visit http://www.wavesstrategy.com/index.php/store.html
Bottom Line: Nifty continued to have a Gap up opening, fill it on intraday and close near the highs. Nifty other scenario analysis shows alternate possibilities as even Reliance Industries has now closed above 950 levels!
Nifty Weekly chart: Scenario analysis
Nifty daily chart: Scenario 1
Nifty daily chart: Scenario 2
Nifty 60 mins chart: as per Scenario 1
In previous update we mentioned that“Market reaction to RBI policy will be crucial. This time bond yields have actually eased from near 9% to 8.88% indicating there should not be any rate hike. In short, the trend is positive as long as prices does not close below 6630 – 6650. Volatility can be high based on above mentioned event and Time cycle today.”
Interestingly, consecutive for 5 trading sessions Nifty had a Gap up opening with respect to previous day’s close and fill it almost instantly or within first few hours. Yesterday was no exception. Nifty opened near 6730 level with a Gap of around 26 points and immediately turned flat. The trading happened within the range of 6675 and 6730 but the intraday volatility was high as expected.
RBI maintained its status quo and did not change key policy rates. This was in lines with majority expectations but still Bank Nifty started showing weakness and closed more than a percent lower. The high made by Nifty during opening hour was exactly on the hourly cycle.
As shown on daily chart, prices have still not formed a lower low nor close below previous day’s low. As long as this structure is intact the trend will remain positive. Close below yesterday’s low near 6670 will be first sign of weakness. We are also showing Moving average difference indicator. This is a very simple tool to measure momentum. Any strong trend will result into short term average moving away from the longer term average. After the trend has run its course the short term average will mean revert and return back to the long term average. This will create a rhythmic expansion and contraction movement in this indicator. However, as shown the current up move from 6490 has failed to move this short term average sufficiently away from the bigger average and so we are getting series of negative divergence on this indicator.
As shown on hourly chart, RSI has continued to produce series of negative divergence and the upside momentum has been faltering. Unless we see break above the blue channel the current wave structure that prices are in wave c of 3rd correction remains valid. Break of 6630 will further confirm this scenario.
In short, so far the trend is up as Nifty still did not close below previous day’s low. If the reversal does not happen in this week we will have to change various existing parameters since it will indicate the market dynamics valid since 2008 has now changed!
Friday, March 28, 2014
Nifty: Astonishing alignment of Time Cycles, Channels, Momentum, Elliott wave & much more! by Ashish Kyal, CMT of Waves Strategy Advisors
We have read about alignment of stars, alignment of planets, equinox, eclipses and more.
These are universal systems following well defined Time patterns. Here we are not evaluating whether these alignment produces impact on stock markets. I am not an expert to comment on this but only a believer of linkages between Equinox and stock markets.
Going to the topic directly the below shows classical alignment of important technical indicators and Time cycles. Alignment is an integral part of universe and so is in stock market!
Indian equity marketsare touching life time highs and making headlines. Everyday there are some stocks leading index higher. But the big question to ponder upon is to understand whether this is indeed start of next bull trend or just another trap for late entrants?
In today’s morning research report “The Financial Waves short term update”our flagship product - daily Equity newsletter we have shown classical alignment of many basic and advanced technical studies – Time Cycles, Channels, Momentum divergence, Elliott wave countsall are synchronized together. Such synchronizations are a rare event which probably occurs once in a year. Below gives a brief overview:
Bottom Line: Nifty continued to move higher on the last day of March series. It is arriving near the cluster of Time Cycles, Channel resistance, Momentum divergences.
Nifty daily chart:
(Elliott wave counts, levels, other details are purposely removed from above chart)
Following is published today morning in “The Financial Waves short term update”. See below the beauty of Technical alignment but let us just wait for prices to confirm:
Nifty continued to move higher and at one point broke above the resistance level of 6650 and touched 6670 levels but finally settling near 6640. Such movement cannot be ruled out on the expiry day and immediately following day i.e. today. We have observed reversals a day or 2 after expiry. We will not change our stand when the cluster of technical evidences are overwhelming and aligned together on the day of 1stApril. Following is the technical picture and such series of clusters were last seen during January 2013 top. However, price confirmation will be the key as mentioned earlier and unless we see a ……….. trend will be positive.
8 different technical indicators pointing to one thing– A classical alignment
1. 49 days Time Cycles:This is one of the most important daily Time cycles we have come across that has worked brilliantly for many months now. I have evaluated many cycles but the turning range as per this cycle is the most accurate so far………
2. 74 period Time cycles:The hourly chart shows 74 period Time cycle. This short term Time cycle also provides the turning dates after every 10 or 11 trading days. This is also due on ……. which is almost coinciding with ……. 2 very important Time cycles.
3. Daily and hourly RSI – Daily RSI has already reached important levels………
4. Important channel resistance:
5. Elliott wave structure:
6.Synchronization with USDINR
7.Breadth indicator – Advance Decline line
8.5 days of blue bar formation
In a nutshell, when so many technical parameters are aligned together does it mean to act now or wait for price confirmation? I think prices are supreme and is one parameter which has not confirmed so far. But we know what levels will bring this final ingredient of price in alignment with above.
Subscribe today “The Financial Waves short term update” and get insight into one of the most exhaustive report published today morning. You can also avail “Offer of the Month” valid for only3 more days wherein you can subscribe for 2 months and get 1 month FREE. For subscription visit http://www.wavesstrategy.com/index.php/store.html
Thursday, March 27, 2014
IPL match spot-fixing and betting scam by Chennai Super King has forced Supreme Court to askSrinivasan and other members who are related to India Cement to step down from their respective post from BCCI for free and fair probe.
Even more to this Chennai Super King might not be allowed to play IPL this time as his son-in-law has been indicted for passing inside information to bookies.
India Cements 60 mins chart:
But what is the outlook for stock?
The above chart clearly indicates that the stock is in downtrend since start of March and as long as this channel is intact the trend can continue on downside irrespective of the event associated. News can result into subjective decision making. For objectivity apply techniques mentioned above!
Wednesday, March 26, 2014
The below excerpt is picked up from "The Financial Waves short term update" by Waves Strategy Advisors. For subscription to daily research report visit www.wavesstrategy.com
Date: 24th March 2014 morning report
Nifty formed an inside bar smaller than the previous bar. Reliance and Nifty both at crucial levels! Nifty levels to watch are at 6580 and 6430. The below research gives a brief overview on correlation between Reliance Industries and Nifty.
Nifty, Reliance and Ratio daily chart:
In previous update we mentioned that “In short, there is no change in our outlook as of now which is sideways to topping. Even the stocks are not providing a clear direction. Break of crucial levels shown on chart will determine the trend over short term and intensity of the movement will indicate medium term outlook”
Nifty continues to move in 35 to 40 points range. On Friday, the movement was confined between 6520 and low near 6485 thereby forming an inside bar. It has been 9 days and prices have swayed between 6575 and 6430 which is a movement of 135 points in totality. Saturday was a short trading session and hardly produced any movement.After the sharp up move of 3 to 4 days markets are ensuring to form a challenging trading environment. During sideways action the best technique that works is Bollinger bands and we have used it prudently. The short term wave counts have 2 to 3 different possibilities even now and channeling technique is suggesting there is not much room left on upside. Nevertheless looking at sideways action after sharp rise there is still a possibility that one minor leg towards 6580 – 6630 might be pending. On contrary, violent break of 6425 will indicate atleast retracement of the up move from 5980 to 6575 has started. A slow and sideways drift below 6425 will not carry much importance. So it will be important to see the intensity of move when 6580 or 6425 is broken.
Nifty and Reliance Industries correlation:
On the 1st chart we are showing similarity of pattern between Reliance Industries and Nifty. Both the stock and index looks to be forming a triangle pattern. This corrective pattern is ongoing since 2008 onwards. The reason of comparing the index with Reliance Industries is that we think this can be one of the stock which will be leading the index in next Bull Trend. So a breakout on RIL will indicate a breakout on index as a very high possibility. However, even this time RIL came close to the strong resistance zone near 910 – 930 and reversed back on downside. It has been more than a year since this stock is moving within the range of 770 – 930.
Reliance is forming a symmetrical triangle whereas Nifty is forming more of an ascending running triangle pattern. To get confirmation of triangle breakout we should see a sharp and violent rise after the breakout and if the momentum continues to be slow and dragging even if the trendline is broken we will look at it only as the part of the pattern formation.
Even though Reliance has been a major laggard post 2008 but the correlation has been very high with index with each major turning points happening within few months horizon. The ratio of Reliance / Nifty (red line) shows that the gradual reduction in slope of the fall indicating that thee underperformance has been constantly reducing. A break above 0.16 level will be first strong positive sign that Reliance has started the period of strong outperformance for months to come.
In short, expect a breakout to occur in this week as the sideways correction is already 9 days old. Also a close watch on Reliance Industries is imperative in case this stock leads the direction of movement for major market. Till that happens patience will be warranted!
The below excerpt is picked up from "The Financial Waves short term update" by Waves Strategy Advisors. For subscription to daily research report visit www.wavesstrategy.com
Monday, March 24, 2014
Sensex at crucial levels. View on Banking, IT, Reliance Industries
The below is the English transcript of article by Ashish Kyal, CMT Director of Waves Strategy Advisors in Economic Times section of Navbharat Times.
Sensex showed a sharp move on upside from 20200 seen in mid of February towards 22000 levels as of 10th March 2014. This sharp up move was a rise of more than 2000 points. Within this period the Banking sector and Capital Goods showed good strength against IT index which has been under pressure over past few weeks. Infosys shares lost nearly 10% in single day after poor futures estimates by the management. This fall was a surprise to many participants. Later TCS also started showing weakness and it seems IT sector as a whole should now enter consolidation after spectacular performance of past year.
Elections will be trigger: Election will be a major trigger that will decide the clear market direction. A clear majority is required by market participants for strong rally. This will help to speed up the infrastructure projects and focus will be on getting growth back on track.
RBI action will also be important: RBI action in 1st week of April will be important. Last time RBI increased repo rate to curb inflation and stabilize report. This put pressure on markets. This time it will be crucial to observe if RBI maintains the repo rate at same level which will be important for short term support to stock markets.
Nifty and Reliance Industries correlation:
Reliance Industries is one of the stock in index which has under performed since the start of 2008 correction. This is one of the major reason why Sensex and Nifty has failed to generate strong momentum as Reliance Industries and few other heavy weights have not supported the rally. The reason of comparing the index with Reliance Industries is that we think this can be one of the stock which will be leading the index in next Bull Trend. So a breakout on RIL will indicate a breakout on index as a very high possibility. However, even this time RIL came close to the strong resistance zone near 910 – 930 and reversed back on downside. It has been more than a year since this stock is moving within the range of 770 – 930.
Week ahead:In short, expect a breakout to occur in this week as the sideways correction is already 9 days old. Also a close watch on Reliance Industries is imperative in case this stock leads the direction of movement for major market. Till that happens patience will be warranted!
For subscription to daily research reports and trade setups with proper risk management levels visit www.wavesstrategy.com
Friday, March 21, 2014
Nifty continues to move in narrow range near the important channel resistance.
Prices showed trend from 6200 to 6562 in span of 5 days and since then it is in non-trending mode from last 7 days. In today’s trading session even till 1.30 p.m, it was intact in between the important levels. Even heavyweight stocks such as Reliance, ICICI Bank, DLF, Maruti, PSU Banks, etc. have arrived near the crucial zone. On the other side RBI will be revising its interest rate policy on 1st April 2014 but we have seen over recent pasts, interest rate hike resulted in markets going up the same day. So markets might not always behave in logical way we perceive. Elliott wave patterns on other hand helps us to understand the structure and trend we can expect irrespective or event outcome!
During this kind of environment, it is necessary to combine other indicators with Elliott wave theory and basic technical analysis to get the clues for the next short term trend ahead. This time, we have used Average Directional Index to gauge the strength in the current up move.
Below is the part of research taken from The Financial Waves Short term update where use of Average Directional Index (ADX) is explained.
Nifty daily chart:
What is ADX?
On daily chart, we are showing Average Directional indicator that measures the strength of the trend. It seems the +Direction index (blue) and negative Directional Index (red) both have reached extreme levels and are turning. +DI and –DI measures the strength of positive or negative true range. In simple terms it helps to understand if on an average basis market is closing more up than down. It also indicates extreme or overbought zone. As both blue and red line has reversed from extreme level it is an indication of sideways action or the uptrend is in matured stage. This is a lagging indicator and so we do not use it very often unless crucial reading is seen like currently. Previously such extreme reading was seen in October 2012 when both blue and red lines reversed and index corrected around 250 points.
In short, there is no change in our outlook as of now which is sideways to topping. Even the stocks are not providing a clear direction. Break of crucial levels shown on chart will determine the trend over short term and intensity of the movement will indicate medium term outlook.
We have been applying various indicators and techniques in conjunction with Advanced Elliott wave theory to be with market direction. Do not miss the next wave as elections are not far away and high volatility is expected in the coming days. Subscribe to The Financial Waves Short term update which includes Nifty and 3 stocks where short term trading opportunity exists. For subscription options visit Pricing Page