Sunday, April 09, 2006 5:05:26 PM
Open High Low Close Previous weeks Close
Sensex 11342 11930 11342 11589 11279
Nifty 3403 3555 3402 3454 3402

As indicated the indicated the index opened flat( I expected it to open weak) on Monday and there after blasted like a rocket and through out the week it continued to move up and on Friday it opened on a strong note and there after in the after noon it fell like nine pins. I have indicated in my last weeks update that the indices are in their final leg of the up move and after that the indices are expected to move down and exactly that happened the timing also exactly coinciding with fibonacci and also the reversal has also happened at the fibonacci value wise. Last week I have indicated that the sensex will move towards 11685 with +/-100 and 12001 as the upper limit for the sensex as the time period was nearing. And the sensex has accordingly made new highs throughout the week and tanked after touching 11930 which is in the range prescribed by me (12001 with +/-100) so we should not take the fall easily as it has occurred exactly at fibonacci both value wise and also time wise. If you can recall my update on March 19th I have indicated that the nifty faces resistance at 3671 not more than that and nifty tanked after touching 3555 which is within the range of +/-100 points. And also another aspect to this in the candle and stick par lace the indices have formed a bearish reversal pattern “ bearish engulfing pattern” which generally forms at top of the market indicating that reversal might have occurred but the pattern needs confirmation in the coming days. All this is indicating that the indices are shifting from bulls to bears and in the coming weeks we may see further down sides. We should not be surprised even if the sensex goes below 11000 mark. And if the correction occurs on a higher wave structure then we might see 10000 also but we have to wait and see. Regarding time point of view I have indicated during the last week that the indices are completing 21 months on higher wave structure and 8 months on lower wave structure and also that the indices have completed 3 years of rise from May 2003 and also months wise it has completed 34 months. All these 21,8,3 and 34 are fibonacci numbers indicating that the we may be in for a rough time in the coming months. As you can see the sensex has reversed exactly 161.8 and nifty also 161.8% as indicated in my earlier updates indicating that the correction might have set in. if the correction which is happening is on lower wave structure the we may see 3-4 months correction which would be very violent and if it occurs on higher wave in 21 months circle then we have nil chances of not seeing a new high during the year 2006. The above said will be negated once the sensex goes past 12001 and nifty 3600. but in my opinion that is not going to happen. Now we see the elliotte and also the candle and stick Pattern.



As can be seen from the chart on the left the indices have formed a “Bearish Engulfing Pattern” indicating reversal of pattern. Generally it is formed at the top and indicates reversal but this pattern requires confirmation in the coming. This is perfectly fitting in to the engulfing pattern the first day is a white body and the second day is a black body completely engulfing the previous days white body signaling that the bears have gained upper hand over the bulls and the balance is shifting towards the bears. So we may see the bears dominating the market after a long time. So it is time to be short on the market rather that the long. But wait for confirmation in the coming one to two days.

A. As can be seen from the chart on the right side. The upper case indicates higher wave structure and the lower case indicates lower wave structure the higher wave is of length
A wave B wave C Wave Probable length of correction
From 4613 to From 6696 to From 6138 to
6696 6138 Now 11930 Total length of the higher wave structure is – from 4613 to 11930 – i.e 7317 points and 21 months- So if the correction has set in at higher level then the length will be minimum chances of hold your breath 2787 points i.e the terget should be min 2787 points fall from 11930 target – 9142 probably in 5-8 months time

Length – 2083 points (gain)Time - 8 months approx Length – 558(loss)Time – 2 months Length – 5792Time period – 11 months

Nifty
A wave B wave C Wave
From 1442 to 2120 From 2120 to 1896 From 1896
toNow 3555
Probable length : Total length of wave is from 1442 to 3555 i.e total rise of 2113 points over a period of 21 months. so if the correction sets in at this wave structure then we might see a min fall of 805 points for nifty so the target should be 805 points from 3555 so the target hold your breath – 2749 in 5-8 months.

Length – 678 points (gain)Time - 8 months approx Length – 224(loss)Time – 2 months Length – 1659Time period – 11 months

The above targets are indicating only and we might see indices going near the targets with +/- 50 points.

B. If the correction has occurred on a lower wave structure then the targets would be as follows

A wave B wave C Wave
From 6138 to 8821 From 8821 to 7656 Current wave from 7656
to current 11930
Probable length: Total length is from 6138 to 11930 is 5792 points, so if the correction has set in at this wave structure which is lower to the above wave structure indicated by lower case alphabets in the right hand side chart then we might see a minimum correction of 38.1% of 5792 i.e a fall of 2206 points from 11930 so the target should be 9723.
Total length 2683 points period 5 months Total length 1165 points time period 1 month Total rise of 4274 points time period 5 months.


In the case of nifty it is rise from 1896 to 3555 a rise of 1659 points so we can expect a correction lasting for 3-5 months and the probable length should be 38.1% of 1659 i.e. 632 points fall i.e. the target should be 3555-632 points – i.e. 2922.

C. Now we split the indices into still lower wave structure and see the probable support levels
Sensex
A wave B wave C Wave
From 7656 to 9442 From 9442 to 9158 Current wave
Total length 1786 Total length 284 points from 9152 to current 11930
points nearly time period 1 month Total rise of 2772 points
2 months time period 2 months.



Probable length : The “C” wave will imitate “A” wave either time wise or value wise of fibonacci ratio wise. Here the length of C wave is roughly 161.8% of “A” wave and time wise it is two months indicating perfect combination of fibonacci in both cases.The total length is the wave is 4274 then the minimum target for the sensex should be 38.1% of 4274 i.e 1628 points fall from 11930 so the target should be 10301 to be achieved in 3-5 months time.


Nifty:
And in case of nifty the lower wave structure the nifty has risen from 2307 to 3555 a rise of 1248 points so we can expect a min fall of 38.1% of 1248 points from 3555. So the fall can be 475 points from 3555 giving a target of 3079 over a period of 3-5 months.

So the assuming the correction has been set in the probable support levels exists at 10301 and 3079 levels for both sensex and nifty respectively.
D. Still lower structure:
But support for still lower levels of sensex is 38.1% of 2772 points i.e. a fall of 1056 points from 11930 giving a target of 10875 still 700 points left. And in case of nifty it will be 38.1% of 772 points rise i.e. 294 points from 3555 giving a target of 3260 still 200 points left to go in a months time.

Conlusion: Considering all this it appears that the indices have come to corrective mode after a long time. And it appears that the indices has all the chances of correcting in a bid way from this levels. It appears that the scenerios C & D will be easily achieved. Even the other indicators are indicating that the indices have entered into corrective mode. All this will be negated once the indices make a new high during this month only. So the probable support levels appears to be 10875 and 3260 for both sensex and nifty. Which it appears to be achieved in this month or the next month. So be prepared for a slide.