Nifty update for 30th December 2011

Nifty gave up all the gains it had accumulated over the week due to shortcovering and resumed its downword journey to retest the 52week low of 4530. As said in the previous post Reliance, ICICI bank, Axis bank cracked its major support zones and continuing its downward journey in search of new lows. Though nifty held its important support zone of 4640 it is expected to touch 4530 within a weeks time. The chart pattern says that one shouldnt be a buyer on dips and 4810 should be considered as reversal on the upside, till then lets keep 4530-4730 as the range

Nifty update for 29th December 2011

Nifty gave a decent opening bell for buyers to square off their positions above 4750 and made lower lows during the session. As i said in the previous posts Nifty can't make a decisive move on the upside because of the lack of volume ,thus it just gave a negative bias to the market but did not do much damage.Though index traders had a normal range bound session but some of the biggies have broken down and poor advance/decline ratio is an evidence for that.Some of the major stocks like Reliance, SBI, Axis bank ICICI bank have already given a topping out pattern and Nifty has a major challenge of holding high in spite of these weaker names.One major pharma stock Dr.Reddy's had a good rally though out the past 3-4 months but is on the verge of a trend line break out on the downside. These are some major worries for the bulls and will have a serious effect on nifty traders once the volume traders are back in the system.As of now Nifty is holding our major support zone of 4640 but making lower tops in intra day charts which is a very weak signal.Once the trading volume is back to normal we could see a break out most probably on the downside.Thus i would not be a buyer on the next dip .We can see a reversal on the upside only above 4810-4840 zone and till then it is a wait for new lows.Volatility data shows that short positions got accumulated on every rise and 4810-4840 could be seen a reversal point on the upside.

Nifty update for 28th December 2011

Nifty has just breached 4800 levels but could not reach closer to our resistance point of 4840 levels. The chart pattern looks like a topping out formation and some of the biggies had a profit booking session.As said in the previous posts the first dip from here can't be judged as a short selling idea but can be treated as a profit booking session. We have an important level at 4640 to act as a cushion and that would be a crucial level for all long positions in the market. Even if Nifty is able to cross 4800 levels we have another hurdle waiting close to 4840 levels , thus we have a cluster of resistance points at these levels.If i'm a buyer i won't be comfortable on highs like 4800 levels and would be uncomfortable to initiate a fresh buying position on highs.If there is a dip to 4640 levels and if it is holding that level one can initiate buying positions. As a trader i would be squaring off my long positions anywhere between 4750-4800 levels.Turnover data is telling you that today's dip was due to profit booking at higher levels and short positions are yet to get activated as volatility was on the negative side.As said in the previous posts a delta neutral position would have given you handsome money in options.Thus be careful of profit taking in the coming sessions too but any up move should only be considered for intra trade as these up moves are not supported by volumes and we have some more lower lows left in Nifty.Thus we can consider 4640 - 4810 as the new range.

Nifty update for 27th December 2011

We could see a decent up move today supported by some large caps.As we have Christmas holiday season in U S and European markets it would be a big relief for Indian markets.Beaten down names are continuing their up move and we are close to an important resistance point of 4840 levels.Volatility cooled off and it is telling you that not many short positions are left in the system. Even if there is a negative move it should be read as profit booking session and not as short positions.These moves cannot be considered as valid as these are not supported by volume.By seeing the poor turnover data we could only trade these stocks from an intra day perspective.If a trader could initiate delta neutral positions in options that would be the best for Index traders.Thus lets buy a dip and let Nifty confirm a top and then go short in the market.As long as the short term trend is on the upside there is no need to go short in the market. In a topping out situation it would first take a dip and that dip would be bought by traders and then it should confirm a top.Thus as long as that situation happens lets trade the stocks from an intra day perspective because now we are in the middle of a short term uptrend and it does not make sense to buy and hold Nifty for a day or two.I don't expect nifty to make an extra ordinary move this week because of the lack of volume in the market.It could most probably be in a range bound session and lets see how Nifty would behave close to 4840-50 levels.

Nifty weekly update 26-30th December 2011

Nifty had a range bound session on Friday and the turnover data too was not very encouraging. It is a Christmas holiday week for the FII's and thus we can't expect an action packed week for Nifty. In the coming week too turnover would be low and Nifty could most probably see a range bound session. If we observe the price action it is evident that Nifty held our major turning point of 4640 and that could be a decent stop loss cushion for all long positions. On the upside Nifty held one of our major resistance point of 4770 on Friday. Another resistance point where lot of short positions got initiated would be around 4840 levels and these are levels that could act as upside cap.If you are an experienced trader start selling options by keeping a delta neutral position as a possibility of range bound market would be more.Thus by making your position a delta neutral one a trader could get the extra premium in his favor.Volatility data was in favor of bears as short positions are getting initiated on tops with a decrease in cost of carry.As per time cycle we have a major date coming around 5th of January for a major turn around. As of now we can keep 4640-4840 as the range for the week.

Nifty update for 23rd December 2011

As said in the previous post it took a dip and we were buyers on the first dip. From there Nifty took us to 4750 which could be a decent level for a Nifty buyer to square off his/her buying positions.Now we have a stop loss at the bottom ie; today's low of 4640.On the upside we could see 4770 and 4860 as major stopping points. If i need to be a buyer buying options on an intra day basis should do good instead of futures. 4840-4860 could form a hurdle as a Fibonacci level and price resistances converge there.If i get a dip i would not mind to buy if volume data is in favor of buy on dips.Turn over data shows that only shorts are getting covered and value buying is happening only in a few stocks.Volatility was on the rise in the first half of the trade thus indicating short build up but eventually those shorts also got covered . In a nutshell Nifty is running up only by covering the shorts and it would not be enough for nifty to carry the momentum on the upside.It needs more buyers to for a decent rally and short covering rally would lose momentum in the days to come.It is a wait call for short sellers as it has not confirmed a top twice so it is difficult to take a call on the short side as of now.Thus let it make a top , take a dip and will have a secondary rally to confirm the top and short sellers would get activated there.As of now 4800 could be seen as upper cap or squaring off your intra day buying positions and at the same time i would like to buy only on dips than highs.

Nifty update for 22nd December 2011

We had a good short covering rally and 21st December gave a Christmas gift for the bulls by giving around 150+ points.We had some resistance points around 4640 levels but Nifty could cross those levels with good volume. Luckily Reliance held its 52 week low zone and helped nifty for a decent rally. As of now we can't short this market as it might have some more steam left on the upside. Fibonacci levels are placed close to 4770 and 4840 levels.Thus these are some area's to watch out for on the upside.I would be a buyer on the first dip as it gives a cushion with a decent stop loss. Turnover data shows that it was a clear short covering rally and long accumulation did not happen at lower levels.History says when every one is on the bear or bull side's markets would react in just the opposite way. That is exactly what happened today and treat it as a normal bear market rally. Decrease in volatility and increase in cost of carry with a high OI would indicate long accumulation at lower levels and short covering rally.As said in the previous post we had every chance of breaking 4640 if it hits that level because of the time element involved in it.December 21st has again proved its importance by giving a massive rally.Thus for short sellers let the nifty move any way and make its top , then think about going short in the market.Lets keep 4630-4780 as the new range.

Nifty update for 21st December 2011

Nifty tried its best for a pullback but could not sustain at higher levels .As said in the previous post it was a clear sell on rise market and Nifty futures held our lower range of 4530.Futures volume charts are showing positive divergence for a pull back but biggies like l&t,SBI,Reliance are making new lows everyday . Thus these stocks should stop falling for a meaningful pullback rally.We had a selling in the last hour but it was not with enough volume but large cap stocks were really disappointing.After 4530 the next stop for Nifty would be close to 4480 levels. Thus lets keep the new range as 4480-4640.I think 4640 is a crucial level as buyers got stopped out around that level and Nifty took a 'U' turn from that level. Thus on the next rise towards 4640 Nifty could possibly break the upside range for a good pull back rally.We had our previous 52 week low around 4630-40 zone and lot of short positions are accumulated over there. Thus the area is of significant importance for any move.Volatility was still on the rise indicating short positions are not yet covered fully.One major worry for bulls is the way heavy weights are registering new lows.It indicates Nifty needs good consolidation period to build a base for the broken down structures.If world markets closes on a positive note Indian markets could do well but 4640-50 levels would be important levels to watch out for and 21st December would be an important date for Nifty.

Nifty update for 20th December 2011

Nifty held our lower range of 4530 on the downside and started moving up but could not sustain on the upside. The accumulation of short positions are much above 4700 levels thus Nifty should hold 4530 levels for any upside bounce.The pull back back was due to some short covering at lower levels and it is expected to be a sell on rise on the coming day too.Nifty has to be in a consolidation phase for any up move and many biggies registered new 52 week lows.As per the wave counts we are in an 'ABC' pattern and the wave count can result a fall upto 4300-4350 levels where an important Fibonacci number can be seen on the weekly charts.Banks led the downfall but Reliance held its level through out the day. On every rise there would be sellers and it would be better to trade in options on any pull back rally. If bank nifty could find some relief close to 7600-7500 it would help the pull back rally. As our range is not broken lets keep 4530-4770 as the range.Volatility was still on a rise and it indicates short accumulation on any up move. Thus it is better to play the trend than the counter trend.It would be difficult to create short positions on a downside break out.As a trader i would buy Put options on a decent rise if the market is forming any topping out levels.As per time cycle 21st and 24th would have a major impact on Nifty. 24th being a Saturday lets assume by end of this week Nifty could form an interim bottom.

Relevance of Economic cycles in Indian markets...Should a chartist care about Economic cycles?

Nifty would be in the last leg of a bear market and majority of Indians don't believe it would end soon.How do we know a market is bottoming out?We are at the peak of an interest rate hike cycle and inflation is supposed to come down in the first half of 2012. Crude oil and Dollar are two major components which decides the inflation cycle. As we are seeing in the commodity market crude oil was testing life time high's till last week and cooled off just 2-3 days ago. Thus it should first top out and start its downward journey for some relief. Dollar Index is continuously making higher bottoms and it would be a major danger for those companies which are involved in trading in overseas markets and it would be a major challenge for the growth of the economy as well.Thus the result season would not be that good for the market at least in the coming quarter. As Dollar was making life time highs it would have a major negative impact for most of the balance sheets. One could see bond yields coming down when the market is about to bottom out and it is a sign of people buying equities. There would be a little more downside left in commodities especially in Gold.Gold could most probably test 26500 levels in the near future.Thus peak of rate hike cycle and bond yields coming down would be the first signs of a recovery process. Another major worry would be European markets as we have not seen anything worse in Europe and we are yet to see major correction in European markets. Thus in a nut shell it would be difficult to get out of all the economic issues that soon but as a long term investor one should start buying any dips close to 4500 levels in Nifty.We have attractive valuation level of 13-14 P/E when the markets coming down from these levels and one could get the stocks at the lowest levels on any panic selling day.Thus make use of the available opportunities in this current downtrend.(followed by nifty weekly analysis 19-23 December 2011)

Nifty Weekly Analysis - 19-23 December 2011

Finally Nifty retested 4640 and broke below that!!It is expected to slide lower as investors have started squaring off long positions.As said in the previous post Dollar Index crossed an important level of 80 on the upside and it would be a hindrance for any up move in Nifty. If we have a look at the volatility data we can see short positions got accumulated only at the top and lot of long positions got out of the market especially long term investors. It was a crash in every respect as along with Nifty , bank nifty and many biggies registered new 52 week lows. As i mentioned in the previous post Nifty got locked in 4830-60 zone as lot of short positions are still active at that level and it topped out exactly in the same range.It is a good time to do some shopping in the equity segment as the valuations are really attractive.Though we were sitting on cash till now time has come to start investing with a time horizon of 2-3 years.For a trader Nifty could still give lower lows and eventually it could form a low any where between 4500-4300.Thus it could be altogether a different approach in trading and investing at this point of time.As per time cycle there is every chance of a good pull back rally on or before 24th December or 21st of December. Technically charts are telling that it is a crash and we could not find a bottom soon ,but market can do anything and that too to any extreme.Thus i'm not saying that Nifty would show some strength in the near future but one should be careful when every body is bearish in the market as markets usually rally at these times.Look for volatility peaking out and Nifty trading at huge discount as these are some of signs of bottoming out.As a trading level lets keep 4500-4530 as a fair level of the current trend with a reversal above 4860. As of now weekly range would be 4530-4770.I'm uploading the same Nifty chart from 2001-2011 where i was talking about 4500 level.

Nifty update for 16th December 2011

A smart pull back from our 52 low zone of 4640 !!Does this mark the end of a bear market?I doubt so.In the near term , yes it was a smart pull back of 100+ points from the days low and Reliance led the rally.At the same time dollar index surpassed an important level of 80 after an accumulation of 3 months thus it should be considered as a serious break out on the upside.We have a big event for tomorrow and ie; RBI's credit policy. Thus let Nifty first fill our previous daily range of 4640-4860.We have lot of short positions accumulated at 4830-4860 zone and that needs to get cleared first.As December had always been a positive month for Nifty due to pulling out of cash by FII's they might do the same this time too, and Nifty has to unfold that. We have 3 important time cycles dates in December and first week of January. December 21 is a seasonal date,December 24th is a moon date, first week of January is always famous for major tops and bottoms.Thus Nifty should form an interim bottom before 24th Of December (as i said in my previous posts 21st Dec too is an important day for a turn around), let it be today's or below that. Thus the picture would get a clarity if we combine it with these important dates. Today's rally was primarily due to some profit booking happened in currency futures. As said in the previous post a sharp pull back rally followed after that sharp cut.As we could see from the turn over data retailers have pumped in some money but FII's are still pulling out the money.4640-4860 could still be a good range for Nifty.

Nifty update for 15th December 2011

Nifty tried for a bounce back and it could achieve till 4850 levels. A 100 points bounce from the lows of 4730 should be considered as a decent pull back.As said in the previous post it would be a sell on rise market and Nifty behaved in a similar way.Turnover data shows that some short positions got created at 4830-4850 levels and on the way up this would be a major hurdle to break.On the downside below 4730 we could see nifty testing its 52 week low.As the index is in a severe downtrend the pull backs would also be sharp , thus one should be cautious in attempting shorts in the last leg of the crash. Thus as of now lets keep testing 4640 is quite a possibility and Nifty would find it hard to hold that level. Volatility was on the rise even on the pull back rally and it clearly shows that short positions got created at the top. Though some positive divergence is visible in Nifty's volume charts 4730 could be the deciding point for Nifty.Advance/Decline ratio was clearly in favor of declines and most of the biggies closed near the days low.Lets keep 4640-4860 as the new range.

Nifty update for 14th December 2011

Nifty took support at 4730 levels and bounced back to 4800 + levels. As said in yesterday's post it was not a volume selling day and a bounce was quite natural.It held our range of 4700 and seems to be getting filled.Turnover data shows that investors are not picking stocks at lower levels and the major cause of the rally was only short covering.Volatility has decreased substantially and Dollar/ Re cooled off in the second half of the trade. It was an intra day bounce and maximum could be extended to 4900 levels.As a trader i would be on the short side again if nifty breaks 4730 (today's low)or at the top around 4900 levels(if it forms a topping out pattern).In a major down trend like this i would not like to play the counter trend move on the upside and would like to sell on every rise.If it breaks today's low it does not seem to hold 4640 on the down side as it is a down ward channel.If it is a consolidation pattern at these levels it would benefit the bulls but it does not seem to happen in the near future. Let 4700-4900 remain as the broader range.

Nifty update for 13th December 2011

It broke our support zone of 4840 and moving towards 4640 zone. We cannot rule out a pull back to 4900 levels at any time. Thus we were playing the downtrend right from 5130 till now.If Nifty is continuously breaking the lows just trade with options for new lows.The structure looks dangerously weak and any bounce would be met with selling. The way stocks are breaking down makes a trader more bearish in the market. Reliance did come below 750 and ICICI bank made a new low.Thus the structure is really broken down and dollar has touched 53 mark!lets wait till 4640 and the way it is breaking it does not seem to hold 4640 this time.Unless and until there is a consolidation phase traders should avoid buying futures.As an investor i would be adding some stocks in my portfolio below 4640.Options could give you handsome money at these levels.India VIX is telling that lot of short positions are getting covered in between and bounce back may be due at 4640-4700+ zone.Turnover data shows that it was not volume selling and the selling was not happened because of short positions but because of long exit by investors.Thus trade the downside cautiously atleast for a short term. 4700 - 4900 would be the new range for options writers.
(One could enlarge the chart for deciding the support and resistance levels)

Nifty weekly update 12-16 December 2011

Though we can't call this quite a downtrend in the short term as a medium term outlook Nifty is still in a bear marker. It can be a sideways moving market for an interim base formation or it could be cracking the 52 week low of 4640. As long as 4840 holds on the down side we could expect a bounce close to 5000-5020 levels where lot of short positions are hiding.If this is a consolidation or bottom formation process one could see major high beta names rallying with good volume.If it breaks 4840 as a trader i expect the downside is still open till 4500 levels , but as an investor i would wait till 4640 to be taken out to square off my long positions.One major worry would be FII's taking out money for the first time on friday.Thus it would be a sell on rise market unless and until a base formation or consolidation process is happening. If we have a look into the daily charts if 4840 holds we still have a higher bottom formation and that would be a good sign for the bulls.As it is a downward slopping channel 5200 would still remain as a hurdle to confirm a bullish reversal. Dollar index is also making a higher bottom and forming a high above 80 levels would be a real worry for Nifty.Turnover data shows that when ever there is a bounce retail investors are getting rid of their long positions and leaving the market.As of now 4840-5020 should be considered as a broader range. If Nifty breaks 4840 retesting of 4640 is very much possible and that too with in a week. As per time cycle 20th,21st of December could be crucial dates for a turn around.

Nifty update for 12 December 2011

It was another red day for Nifty with a huge gap down but managed to hold our immediate support level of 4840. The turn over data shows that it was a low volume day but instead of creating long positions lot of short positions got covered near 4840-50 zone as a big is due today. As of now lets keep 4840 as a crucial level for Nifty to make or break and below that one can see 4700 levels once again.In the recent history Nifty never had a triple bottom. Thus if it retests the low of 4640 it does not seem to hold this time. I expect it to retest 4700 with some bounce backs. Some new short positions got created at the higher end of the channel around 4940 levels. As long as 4840 holds we could expect a bounce till 4950-5000 levels but the overall trend is biased towards downside. As the volatility was on the rise it is a clear sell on rise market. In a down ward trending market it is better to know the upside cap where the shorts could come in and our upside cap is around 5000 levels.Thus let the world market unfold the trend after the event and we can have a further look for a major trend.(followed by weekly update on Sunday)

Nifty update for 09 December 2011

It was red all over and Nifty was about to kiss our lower range of 4930 but had a rebound from there. If the European summit brings more worry it would be a severe cut towards 4840 levels from where the gap up happened. As of now the interesting play would be around 4930 levels. It has to be decisively broken on the downside for more downside targets. Stocks had a severe cut especially banking and metals and biggies led the fall.The turnover data shows there was lot of long unwinding and huge short positions got created. As far as Europe is concerned it would be an important day as the summit is happening.Nifty would still be in a trading range but the deeper cut in stock futures would be more painful for the retail players.So as of now lets see whether 4930 holds on a closing basis and if it breaks that range on the lower side , lets see 4840-5020 as the new range. The major distribution zone for nifty was around 5010-5030 levels and this would be the major level to watch out on any bounce.

Nifty update for 08 - December -2011

As said in the previous post (07 Dec) Nifty would be testing a Fibonacci number at 5000-5110 and crossed that level but failed to close above that level. As we could see the cost of carry was extremely biased towards the buying side and that would be the first sign of a topping out pattern.It was trading with a premium of 30+ points and it eventually got reduced with an increase in volatility . Thus it is a clear indication of short build up on highs. Nifty has almost completed 3 phases of a rally .It was a sharp up move , had a profit booking session and a secondary rally to confirm the top. So as it has successfully tested the Fibonacci levels it could head for a smaller correction as long as 5130-5150 holds on the upside.There would be a slight possibility that there would be buyers on a dip.Our weekly range still remains as 5150-4930.The turnover data shows that profit is taken out at highs and it indicates squaring off long positions above 5120. Dollar is again moving towards 52 zone and closed at day's high.On a medium term view one could keep 5020 and 4930 as major support levels and even if Nifty holds these levels it would be a higher bottom higher top formation which would be good opportunity to utilize the dips for buying.Major worry for an up move would be ICICI bank is at a major support level of 770 and if it is not holding those levels it could correct further.

What does Gann say about Nifty

Scenario 1:These angles would tell you where are the important support and resistance points. These lines look like simple trend lines but they are some angles which tell you the final resting places for Nifty. If we have a look at this chart it tells you that in the weekly chart Nifty is still holding that trend line and below that it would take Nifty to 4200-4300 levels. As of now these extreme levels are irrelevant as we are no where close to that. In the current scenario Gann angles say there is a well tested angle (which i have marked in red color) and currently it is placed around 5200 levels in the weekly chart. If it surpasses that level the next level appearing in the weekly chart would be 5600 on the upside.As it is the weekly chart 5200-5250 levels will be marked at the same angle resistance line and this angle could play as a resistance point for the current up move.Blow 4630 levels the angles are not offering any support levels and a fall could be extended towards 4200-4300 levels.
Scenario 2: If nifty is getting close to 5200 and the angle is in a upward slopping line it could offer decent support close to 4900-4850 levels as you see in the chart.Thus Nifty could form a higher bottom , higher top formation which is actually a bullish pattern for the short term.

Nifty update for 07th December 2011

It was a range bound session and Nifty is in a double top kind of formation near the Fibonacci level of 5100-5110. As long as Nifty does not move above these Fibonacci levels the double top formation is confirmed. We were in the second phase of the rally , ie; profit booking session but Nifty was bouncing back from the lows with lot of stock specific action especially Axis bank and SBI.Any profit booking session would be continued by a secondary rally to confirm the top. So if one has to go short he should get the top and otherwise it would be buy on dips market as i was saying through my previous posts(in the coming sessions too).Dollar Index was not ready to cross 80 + levels and that really helped nifty to get good buying interest. At these levels of 5050-5100 one should have a look at the premium with which Nifty is trading. As of now nifty is close to the maximum premium levels of 30+ where it is extremely biased towards the upside. Thus any decrease in the premium with an increase in volatility is a sign of short build up.Some short positions were created in nifty as volatility was on a rise.Poor turnover data shows that it was a profit booking session and all the up moves were with out much volume.The immediate support lies at 4930 levels and if nifty crosses 5020 levels on the downside with the same upside cap today's high is confirmed . Thus as of now 4930-5150 would be the range.

Nifty weekly Analysis 05-09 Dec 2011

It was a great week for the bulls as nifty was in a short term bullish setup (still is) and almost reached all the Fibonacci numbers. The final Fibonacci number is placed at 5100-5110 and it has almost reached those levels. If one really trades a bounce i would have squared of my buying positions above 5030 levels and would square of my positions close to 5100 levels.As i said in the previous posts all the dips were met with huge buying interest.One should use any profit booking session to buy again for secondary rally . As i was telling in my previous posts in a rally there would three phases a sharp upmove , profit booking session and a secondary rally to form the top. Thus as of now we have seen only the extension of the primary rally and major profit booking session and secondary rallies are yet to follow. Thus in the shorter term 5200 will remain as the major hurdle to cross and by crossing this nifty would be able to regain the temporary bullish setup. One could see nifty forming double bottom at 4930 levels and rallied. Thus 4930-5150 would be the weekly range as of now.(Read about world markets and Nifty from 2001-11 in previous posts)
Time Cycle levels.
If the up move continues Nifty is expected to hit 5170-80 levels on the 9th of December and on the downside there is a possibility of getting back to 4950 on the 13th of December. In a nutshell if nifty fails to reach 5170-80 levels on the 9th it is expected to touch 4950 by 13th of December.(Consider +,- 1 day for this forecast). In the longer term watch out for 20,21 December and first week of January close to 5th of January for a a major change in the trend)

A combined analysis of Dow , FTSE and DAX from 2001-11

Here i'm trying to project how world markets are looking at the moment.

1. Dow Jones - It is making lower tops but making higher bottoms at the same time.It has retraced successfully from the top of 12900 levels and on its way upto test 12600 where the current trend line is placed. As one can see the lower part of the trend line is placed at around 11100 levels and only below that Dow's down ward move is confirmed.
The trend is still range bound with a negative bias and has to come below 11100 levels to confirm the downtrend.

2. DAX - The German index is also moving at par with the Dow and there would be a trend line resistance placed around 6600 levels.Unlike Dow it has broken higher bottom formation and broken major support levels.DAX has also retraced 61.8% and bounced back from there.

3. FTSE - This is one of the major markets where the bear market is still active as it has retraced 100% from its previous top. For the time being it can be considered as a double bottom formation but is expected to correct soon.The upside cap would be around 5900 levels.

Conclusion: These charts show you if we compare these 3 charts with Nifty our index is the only one which has retraced more than 100% and consistently making lower tops and lower bottoms.Thus if we compare it with the world markets we cant rule out a possibility of Nifty crossing 5330 and marching towards 5600 but by that time the world markets would be forming multiple tops and that would definitely act as a hindrance. If the world markets take out the trend line supports it would be altogether a different game. (Instead of Dow , S & P 500 would give us a better result but unfortunately i could not upload enough data into the software)

Nifty - An analysis from 2001 - 2011 (Strictly for an Investor )

Let's have a look at the weekly charts of Nifty from 2001-till date. This analysis would be based on simple trend line analysis and the more data we have the more would be the accuracy.If we have a look into Nifty chart we can see that it was consistently making higher tops and higher bottoms from 2001 till the time of recession. As an investor though he cannot catch the bottom with the simple trend line he could ride a trend. Let's come to the present scenario. Nifty is consistently making lower tops and lower bottoms and that should be considered as a bear market.As per the weekly chart the trend reversal could happen if Nifty consistently gives closing above 5200 in the short term and above 5330 in the longer term.If we have a careful analysis of this weekly chart we can see that above these levels Nifty could ride to 5600 levels.If Nifty is giving a consolidation a these levels as this is a downward slopping channel we could be in a bullish trend above 5200 levels provided it should not give a lower top after that.In my previous posts i was talking about 4500 levels because that year trend line got broken below 4720 , it could be a trap but the market has to prove that by crossing the above mentioned resistance levels to confirm the upside break outs and till then it is still very much in a bear market.(Please click on the chart to have a larger view)
(Followed by Nifty weekly update and a comparative analysis with the global markets (will be updated before Sunday evening)

Nifty update for 2nd December 2011

Though we expected a bounce till 4940 a opening at 5000 levels was a little bit surprising but retraced to 4940 levels during the final hours.Though it retraced to 4940 it just had a bounce from there and the whole rally was relevant and much needed one.There is no change in opinion for the downside as the trend reversal has to happen only above 5200 levels and that too with proper consolidation.We have seen bear market rallies at many stages right from 6300 till the recent one.These rallies must be used as a buy on dips for a shorter period of time because whenever it comes down , will be met with good buying interest as people did not get an opportunity to participate in it.If we list all the major tops 6200 levels we had huge gap up openings ,repeated at the tops of 5900, 5700,5200 etc. I would consider this as a bear market rally. If we have a look into the stock data as i said in my yesterday's post Reliance moved up because of buying and not of short covering. Banks went up because of short covering , touched resistance points and came back with ICICI as an exception.Implied volatility has come down substantially with an increase in open interest and cost of carry and thus it indicates huge short covering and buying on dips. On the downside 4750 would be a major support zone from a medium term perspective and buy any major dip for the secondary rally as all the major rallies would get topped out with a secondary rally.As it is already done with the major Fibonacci number at 4940 next important level would be 5020-5030 levels where next major hurdle is placed at, but buy only the dips and no need to buy at the break out of highs as it would be dangerous.Selling on rallies was very evident in major stocks like l&t and Axis bank.Turnover data tells that lot of profit booking is happening at higher levels. I would wait for a topping out pattern to go short and its better to wait for a secondary rally to create that top.