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M.Sri Mahidar

Nifty Update - as on 12th January 2009.
My worst fear has come true. Nifty has Moved below the 2800 level without any difficulty in the early part of the trade. nifty moved towards 2750 and there after bulls have tried to move it over 2800 again in the afternoon but failed to do so and from afternoon onwards nifty has drifted lower and made a low of the day and finally closed near the low of the day at 2773. one point to be noted is that this is the third consecutive lower close and nifty has closed at lowest point in the last four weeks and any move below 2700 will result in nifty moving towards five weeks low. As nifty did not find any resistance at 2800 level we have chances of nifty moving towards 2570 and 2503 in the comming weeks. Now also 2800 becomes a very good resistance level for nifty to conquer. The 20 day moving average is at 2950. Any movement of nifty above it should be taken as an opportunity to close your shorts and go long. As per my weekly update it appears that the triangle option is negated and at 3147 we might have completed flat there by completing the wave-4 and we might have started the wave-5 which has all the chances of moving at-least towards 2503 and if broken then towards 2223 its oct 08 low.
Another point to be noted is that the Directional Momentum Index has started to move up after bearish crossover and from lower levels indicating that bears are just gaining upper hand. In comming one to two days we might see bulls trying to make a come back after which the market might again drift down wards. So for the time being it appears the bears are gaining upper hand.
M.Sri Mahidar
January 12, 2009 8:35:10 PM IST

Nifty for the week ended 9th January 2009.
Nifty has moved exactly as indicated. If any body is following the weekly updates the movement of nifty would not have surprised him. Nifty opened the week on a strong note at 3043 and moved up to make a high of 3147 and collapsing like a pack of nine cards, thanks to satyam made a low of 2810 and closed the week with a loss of 173 points at 3873. Even though nifty has concoured 3100 it failed to maintiain at higher levels indicating that 3100 appears to be a major resistance levels for bulls to concour. It appears that the bulls did not want to spoil their new year party and continued it till tuesday and then bears came back with a vengence, probably from new year holidays and bears have to surrender all their two weeks gaings to bears. The point to be noted is that the rise for the last two weeks was on very low volumes and the fall on last two days are on huge volumes indicating that it is still a bear market and we should use every major rise as a shorting opportunity. I have indicated in my last weeks update that even though nifty moves above 3100 it would be difficult to move past 3150 and nifty made a high of 3147, i have also indicated that if it fails to move past 3150 then we have minimum target of 2800 for nifty and look at the low made by nifty 2810 it missed the target by a whisker. There are one or more points which are to be noted which will offer very good opportunities for us to trade in the future period.

1. Nifty failed to sustaing above the 3100 levels, which becomes a very curcial resistance level in future period when ever it has to move up.
2. Nifty has for the last two week moved above the 20 Day EMA and it was finding support at those levels. It was moving betweek 20 Day EMA and the 50 Day EMA and during the current week it has just moved above the 50 Day EMA and collapsed on the last two days and has moved below the 20 day EMA which is at around 2970 levels. So in the comming weeks or months the 20 Day EMA becomes a crucial resistance levels to be concurred by bulls. So any shorts should be immediately closed when ever nifty moves above the 20 Day EMA. So the level to be watched our for comming weeks at present is 2970.


3. Nifty has taken support at 2800 in the last month and also during the current week. When ever it touched 2800 levels it rose sharply, considering this 2800 becomes a crucial levels for the comming week any breach of the same should be taken a very bearish scenerio and should be shorted with a stop loss one tick above 2800, if 2800 is voilated then we have all the chances of nifty moving towards 2670 and 2503 levels. So watch out for 2800 level.
4. In the weekly charts nifty has formed a very bearish pattern the "Dark Cloud Cover" which is an extremely bearish pattern and which does not require confirmation. Meaning that we have all chances nifty making a new low. But the high of the week should not be voilated i.e. nifty has to move above 3147 to negate this pattern implications. So any move below this weeks low of 2810 should be taken as an opportunity to short the market with stop loss at this weeks close.
5. Nifty is failing to move above the sloping trend line conneciting all the lows from January 2008, which i have been discussing for the last few weeks indicating that weakness still persists and nifty has to break this barrier to indicate that bulls are gaining upper hand. Till this is broken we all the rallies should be taken as a shorting opportunities.

Elliotte wave analysis:

i have been discussing two alternatives for the last several weeks, still it has not been confirmed as to which pattern it is forming.

Option - I -TRIANGLE

Last week i have explained that if nifty moves above 3121 then we have to change the counting of the different waves of the triangle and as nifty has moved above 3121 it appears that nifty might have compleated wave"c" instead of wave "e" indicated earlier in the last week. last week i have indicated that if 3121 is voilated then we have to recound entire wave structure and the same has happened during the week. So as per the new structure it appears that we might have compleated wave -"c" at 3147 and also wave - "d" at 2810.Wave -"c" was of length 644 points from 3503 to 3147, so wave - "d" should be of length atleast 50% of 644 points i.e atleast 322 points, considering this the minimum fall should be 322 points from 3147 which comes to 2825 and nifty has made a low of 2810, so i have assumed that wave-"d" would have compleated. if wave -"d" is compleated at 2810 then we should be forming wave-"e" which would have minimum length of 168 points i.e it indicates the nifty should move towards 2978 after which it should collapse from those levels to sub 2500 level. incidently 20 day EMA is also at 2978 so this level assumes a curcial importance from elliotte wave point of view. Any failure of nifty moving towards 2978 and break of 2810 will negate the triangle formation and we the Option -II holds good. So as per this pattern we have all the chances of nifty making an attempt at 2950.

Option - II FLAT

As per this option i have indicated in my last weeks update( chart you may refer last weeks update) that the wave-"c" of flat should have five waves and indicated that we have compleated four wave and that we are in formation of fifth wave. it appears that fifth wave should have compleated at 3147 and also we might have ended the 4th wave of one higher structure and we should have started wave-5 ( which we are discussing from last so many weeks) any break of 2810 in the comming week without nifty moving towards 2950 will confirm the flat formation, Which also confirms that we might have to see atleast 2503( the low of Wave-C) and we should alteast go near the oct 08 low of 2223 in the comming weeks.

Considering the above it appears that bears have the upper hand atleast at this point of time. Unless and otherwise nifty moves past 3147 bears are not defeated. So you are advised to trade accordingly.

Supports: 2800,2670,2503,2223

Resistnaces:2968,3000( psychological),3100,3161,3240

Turtle Trading: 4 week Phenominon,

Two week back i have indicated that we should take long position once it has moved above 2975 but has asked to wait till it moves past 3161 look what has happened as nifty did not move above 3161 we are saved.

if we have taken a long position at 2975 we might have closed our position at 2812 with a loss.

In the current week: Go long on close above 3147

Go short on move below 2812

ATR is at 117 indicating that further short position should be added on move below 2578 with a stop loss at 2695.

Note: the above write up is only, the interpretation as per the patterns and should not be construed as an investment advice. and the author is not responsible for any loss incurred in this regard.

M.Sri Mahidar

11th January 2009 Time:8.15 PM

NIFTY UPDATE FOR WEEK ENDED 2ND JANUARY 2009.

First of all wish you all a happy new year.

The market has surprised every body during the week and moved up and colosing of a positive side for the week. Nifty opened weak moved toward 2800 made a low of 2812 and there after just took off and made a hight of 3079 on friday before closing at 3046 with a gain of 189 points over the previous week. It may be noted that nifty moved below the 20 Day EMA on monday and suddenly moved above it on the same day and started to move up for the whole weak. Nifty appears to be moving between 20 day and 50 day EMA so these two become the crucial resistance and support levels. It tried to move above the 50 day EMA two weeks befor failed and moved towards 20 Day EMA and in the current week it tood support at 20 Day EMA and moved towards the 50 Day EMA and now is just closed at 50 day EMA which is at 3050. So any move above the 50 Day EMA will be a significant event as previously it move above it in early October 2008 and there after fell like pack of cards. In september end and early part of October when it moved above 50 day moving average it moved towards the 100 day EMA just touched the 100 Day EMA and there after collapsed. So if nifty moves and closes above the 50 day EMA then it will surely try once again at the 100 day EMA which is placed at around 3390.

One point to be noted is that nifty failed to break above the 3100 levels this week also, it has been trying to break above it twice in a fortnight and failed so currently apart from 50 Day EMA 3100(3120 to be precise) appears to be a big hurdle for nifty to break, if it is taken out then it will surely make an attempt at conquering the 100 Day EMA. In my view no longs should be initiated till nifty moves above the 3100 levels successfully close is preferable. So any body wants to trade he can go long as soon as nifty move above the 20 Day EMA with a stop loss at around 3030-3040, and if it successfully closes above 3100 then stop loss should be moved towards 3100 levels. So the comming week will unfold a new trend eigther up or down. But the raise all through the week was not on high volumes so the rise is some what doubtful. If nifty fails to sustaing above the 3100 in the current week then i am sure that we might see 2500 levels in the month of january it self and probably an attempt at 2200 levels by february 2009. Considering this we can say that we are at a very crucial week ahead as far a trading is considered.

Now we proceed to Elliotte Wave analysis:

I have been advocating two alternatives for the last two months and they still hold good till not also.

Option - I Traingle:

Last week in the this option i have indicated that we might have compleated the "c" wave and we might have stated "d" wave and indicated that the target for "d" wave will be around 2810(min) and see what has happened nifty has made a low of 2812 ( where Wave"d" appears to have ended and and now it appears to be forming a "e" wave which shold be the final wave of the triangle after completion of which we might see wave-5 unfolding which has all the chances of taking the market towards the Oct 08 levels. any move above the wave"d" high will negate this theory or wave"c"( of triangle) is not still compleated and we might be in the final wave of the "c" wave after compleation of which we might see wave"d". If nifty moves above 3120 then it should not in any case move above 3240 high of the Wave"a" of the triangle. Any move above the 3240 will negate this entire option and we have to againg re-look the the wave structure. So it appears that the current week will through open the entire thing on the structure and we will be in a position to interprit it. So be prepated for it. One point to be noted is that volumes are slowely drying up and the market appers to be not giving any clear direction and every body is loosing interest in the movement of market as it is directionless and this is the peculiar feature of the triangle and when every body gives up and volumes dry up suddenly it give a clears break out with huge volumes and then moves fast there after. So have patience and keep a watch on the targets given as they will help you in giving clues about the market direction as per the above calculation/information.

One point to be noted is that, in the case of triangle also, the triangle will have five waves and each wave will have internal structure of five waves and one of the five waves will break itself into its components i.e five waves, so in this case it appears that wave "c" is itself breaking itself into five waves and it appears that we have compleated four waves and we might be forming a wave-5 of the wave-c after compleation of which wave-"d" will commence which will have a minimum target of 2800.

Option - II Flat:

If nifty moves above 3150 then we can beleive that we have all the chance of nifty making a flat. In this option it appears that we have compleated wave"a" and "b" and we are in the final leg of the flat i.e wave-"c". Flat will have only three wave "a,b & c" and we are in the final wave, one feature of the waves is that one wave of the three waves should break it self into components. Here it apperas that wave-"c" appears to be breaking it self into components. In falt wave "a &b" will have three waves each and third wave i.e"c' should have five wave and it appers from the chart that it is breaking itself into components i.e five waves and it appears that four waves are compleated and we are into the fifth wave and after compleation of fifth wave which will also signal the compleation of wave-4 and from there we will start wave-5 which has all the chances of moving towards the Oct 08 lows. So wait and see what the structure will unfold

I will be posting any update on the same as soon as the structure becomes clear. It appears from the above, that we might be heading for some choppy market after which we might get a clear direction.

Support and resistnaces:

Support - 3000,2950,2800

Resistances: 3050,3100,3240,3390

Turtle Trading - 4 week phenominon Two weeks back i have indicated as per turtle the we should go long on movement of nifty above 2975 and also said the it is better to wait for movment of nifty above 3161 look what has happened.
If any body has taken long postion at 2975

ATR is at 110 So add position on moves above 3090

Close position or book losses : on move below 2812

Take short postion on close below 2646

Note: the above write up is only, the interpretation as per the patterns and should not be construed as an investment advice. and the author is not responsible for any loss incurred.

M.Sri Mahidar, 4th January 2009, Time 7.58 PM

Nifty Weekly Update - week ended 27th December 2008

As indicated in the last weeks update and also in the mid-week update, nifty failed to move and close above 3100 and corrected there after. So for the time being 3100 becomes a solid resistance and 2500 a good support level. Any break of these support/resistances has all possible chances of nifty moving atleast 500 points from those levels. so for the time being 3100 & 2500 are the levels which have to be closely to be watched. During this truncated week the markets have slightly moved above to a high of 3120 but was not able to sustaing there and started to move down from there and finally closed at 2863 a loss of around 220 points from last weeks close.

Nifty has indicated two bearish reversal patterns during the current week. One is that it has formed a bearish engulf pattern as per candlestick, which implies that the up move which has started at 2503 has ended at 3120 and we my be on course to 2503 again but depending upon the pattern which it is forming which will be discussed in the following paragraphs. The implicatins of bearish engulfing pattern will be there till nifty moves above 3120 in the comming weeks. Secondly nifty has moved below the 20 day EMA singalling that it might has started a down ward movement. From January 2008 onwards 20 day EMA is proving to be good support or resistance level. When ever indices have eight moved up or down from 20 Day EMA nifty was moving to the tune of around 400 points from the EMA. Currently 20 Day EMA is at 2920 so in very short term it becomes a very good resistance level which i thing will not be easy to cross. if nifty does not move above the 20 day EMA in the comming week we have all chances of seeing nifty at 2500 levels. So make you trading decisions accordingly.

Now we analyse the Movement of nifty according to Elliott wave principle:

I will discuss the two options which i have been discussing for the last few weeks:

Option -1 A triangle:

Under this option it appears that we might have compleated the "c" wave of a triangle ( which it self is the 4 wave from the top of january) and it appears to be forming a "d" wave which will have a minimum length of 310 points from a high of 3120 so the minimum target comes to 2810 which is nearly 45 points away from the point, So still there are all possible chance of nifty moving down to those levels. But in my openion we might see nifty moving towards the 2750 levels and then moving up. but if Nifty moves below 2730 then we have all fair chances of nifty moving towards November low of 2503. This implies that we have all possible chances of nifty moving downwards from the current levels. In this option after compleation of "wave-d" the market will raise to form "wave-e" which has all chances of moving towards 3000-3050 levels where wave-4 will compleate and the market will form wave-5 which has all the chances of taking nifty to 2200 levels.

It may be noted that triangles are the peculiar features of "wave-4" and we are in wave-4 currently so it appears that indices might be forming traingle only but the option -II cannot be ruled our in the current schnerio. if nifty moves below 2503 then option-I is negated and option -II holds good.

Optioin - II - a FLAT:

Under this option it appears that we might have compleated all the three waves of a flat i.e wave "a,b&c" which also means that we might have compleated 4th wave of the total fall from January highs and we might have just started the "Wave -5". Wave-5 should ideally go below the los of the wave -4 i.e the market should move below the october lows of 2203 so we have still 650 points to go from the current levels. this is not still confirmed but any move of nifty below 2500 will confirm the same and we might see nifty knocking the doors of 2000 this currently appers to be a frightning target, but if the pattern is correct then we has all the chances of seeing the same i have no doubt on this, so in this case also we have all the chance of nifty moving down from current levels.

Be it Option -I or Option-II we will be seeing the markets moving further down, in option -I it will be a fortnight away and in option -II we has all the chances of nifty see voilent donward movement in the current month series only.

So Trade nifty accordingly, only brave hearts can go long in this market.

Turtle Trading - 4 week phenominon
Last week i have indicated as per turtle the we should go long on movement of nifty above 2975 and also said the it is better to wait for movment of nifty above 3161 look what has happened

Go long on move above - 3120
Go short for any move below -2570
Note: the above write up is only, the interpretation as per the patterns and should not be construed as an investment advice. and the author is not responsible for any loss incurred.

Nifty as on 22nd December 2008

As has been indicated in my weekly update, nifty is finding it difficult to move above the 3100 level and also its 50 Day EMI( which is at 3077). These two levels appears to be very crucial levels for the next moths series. One positive feature of last ten days nifty movement is that the rises were on high volumes and the falls are on low volumes, indicating that the bulls are slowely comming into forefront after long time. So better watch out for surprise moves in nifty in comming weeks.

The movement of nifty for the last ten days is between 20 day EMA and 50 Day EMA so these two levels will act as major support levels in the comming weeks. Any breach of the same will give a good movemnt in the direction of break out. So any longs should keep stop loss at 2900 and shorts should keep stop loss at 3100.

One point that is to be noted is that Directional Momentum indication popularly Known as DMI is moving down on daily charts giving an indication that the Markets are becoming directionless. So any trades should be initiated with stop loss at 50Day EMA or 20 day EMA.

Note: the above write up is only, the interpretation as per the patterns and should not be construed as an investment/trading advice, and the author is not responsible for any loss incurred by investing/trading in this regard.

Nifty Update for week ended 20th December 2008.

Nifty has been moving as indicated in the last weeks update. Nifty during the week has moved in the range of 2900 to 3100 and finally closed at 3077 a rise of 5.31% over the previous week. This is the second consecutive week on week rise. It may be noted that nifty has not closed postively for more that two weeks consiqutively starting from the month of August 2008. It was in july where the nifty closed in positive territory for five consiquetive weeks. So odds are favoriting bears for the comming week on this basis only, but technically we have to go deep into the patterns and the trend which is arising.

One point which is to be noted is that nifty has been staying above 20 Day EMA for the last eight days and has just found resistance at 50 Day EMA which is between 3075-3100 levels. From January 2008 onwards it has found a very tough resistance at 50 Day EMA and 100 Day EMA. when ever it has moved above the 50 day EMA within week or two there was a free fall be it May or August 2008. So we might face a good amount of resistance at 50 Day EMA and at 100 Day EMA. So the current resistance levels are 3100 and 3450-3475( 100 Day EMA). So these points has all the chances of finding a good amount of resistance. between these two also we have resistances at previous hights of 3161 and 3240. So currently nifty is heading towards crucial resistances levels which might determine the fate of the market for the comming months. So we have to be patience and wait for the markets to break above these levels to make any investment/trading decision. So all longs should be protected with a stop loss at 20 Day EMA, which is at 2900 levels. Any move below the 2900 has all the chances of nifty touching its Nov lows of 2500. So now you can decide on how to trade for the current week.

Any move of nifty below 3000 level should be taken as first warning signal and any move below the 2900 levels should be taken a confirmation the the down trend towards 2500 levels.

it can be seen in the above chart that nifty has been finding support at the sloping trend line drawn from the lows from January 2008 and it has broken it in october carnage and now it faces resistance at this level which is at 3100. In the month of november it has failed to raise above this level and made a high of 3240 and currently it is exactly at that level. It has finding it difficult to move above this level for the last two days as nifty is hovaring between 3050-3100 level and not able to move above it so, currelty 3100 becomes a very crucial levels for the markets for the comming week, and it has to be closely watched to make a investment/trading decision.

Another point to be noted by the movement of nifty on friday is that nifty has fomed a "star" pattern as per the candle and stick pattern which indicates indecisiveness in the market and generally whenever star patterns are formed they indicate the end of the current rise and prices generally reverse from those levels. But if the high of the same is voilated then the trend continues. The high of friday was 3106, if nifty closes above 3106 then the implications of the above pattern are negated. so better watch out.

Last week i have indicated two patterns as per elliotte wave option-I being a triangle and Option -II a flat and this week also these pattens hold good.

In the option - I which is a triangle we might be forming "c" wave which will complete soon and any move above 3240 will negate this view. if wave "c" compleates at this level we might see nifty moving towards 2750-2800 levels where from it will rise towards 3000 where in the wave-"e" will end and where in wave-4( one step higher will end) and we will be starting wave-5 which will take nifty towards the october lows.

I case of Option-II which is a flat it appears that we might be forming "c" wave which is the final wave of the flat and after which wave-5 will commence which has chances of seeing october lows. In this case nifty has chances of moving towards 3240 and then reversing.

So better watch out for the choppy markets in the comming weeks are the markets are entering a zone of heavy resistances one after another so be cautious in your trade.

Current resistances: 3100.3161,3240

Supports:3000 and 2900

Turtle Trading:

Last week i Have indicated that as per turtle trading you may go long on close above 2975 and on monday if any body has taken a long position on move above it he may be sitting on a good profit.

Action buy initiated on break above 2975

Average true range is at 120: considering this Increase you positions on close above 3215 only

close your position on close below:2850

Go short on close below: 2502

Note: the above write up is only, the interpretation as per the patterns and should not be construed as an investment/trading advice, and the author is not responsible for any loss incurred by investing/trading in this regard.

M.Sri Mahidar

Sunday: 21st December 2008 time 19.00