The number of bearish counts have suddenly increased on Nifty. Even the bullish counts donot speak of beyond 5600. Now that we went below one of the critical levels (5250-5300) what are the chances of the two major counts proposed in the last post... nifty-c wave?
(1) The Preferred: An ending triangle from May 2010 to end the C of major B. Within this, the highs of 6370 was "a"; the low of 5170 was possibly the "b" and we can look for a "c" up with initial target of 6180.
EW logic: -The major A was quite sharp and the correction that followed was quite sideways thereby suggesting market strength on the upside.
- Assuming that the B has ended in May 2010, the upmove from till November 2010 appears to be in "three" waves. So if the start of C is corrective, then we can expect atleast a triangle five waves if not a diametric or a symmetric.
- Even though the first downmove from 6180 is impulsive, thereafter we seem to be in corrective zone. Most counts I am seeing in the blogs show the third wave from 6180 with internal structure showing 1=3=5 (more or less) with barely any extension.
- The end of B at 6370 or at 6180 did not display any euphoria or public participation (though I am not sure whether this is the case. It is quite possible that we have accepted the India story so much that the euphoria was not even evident. Further the non-confirmation was definitely there with most mid-caps and small caps and many sectors failing to join the rally).
- Also check-out the timing of the major corrective waves as pointed out in the last post.
(2) The Alternative: If the bear market has indeed started at 6180 (chances of it starting from 6370 are less in my view since it is difficult to see how a zig-zag would end in a three), the first fall to about 5800 was impulsive. Thereafter since we didnot have an impulse down, the bearish alternative would suggest that this whole action could be part of a running 2. In this case I think the 3 can take us easily down to 3800, with good chances of filling the "Election Gap".
EW logic: There is quite a bearish mood among the fund managers, trading blogshpere and general sentiment. Typically this should be exhibited in two periods, viz., at the end of a fall or in the middle of a fall. So if we are in the middle, then we can get to around 4K easily.
check the two alternatives at
https://sites.google.com/site/krgishere/Home/Nifty-Mar-2011.doc?attredirects=0&d=1
The point of non-confirmation for the bearish view would be getting above 5800 and fairly fast. For the bullish view, it is more tricky since we are looking at a triangle where B can even exceed A. The speed and extent of the subsequent downmoves would be the decisive factor.
5 comments:
One alternative that I should perhaps add is a slower grind down. We could look at a complex structure down as a-b-c from 6180 till 5177 and may be in a "x" wave now, to be followed up by another corrective structure down
while i agree to u'r X wave logic , i don't think there will be any triangle like u and for that matter RV is suggesting.
just because time wise B is greater than A and for a triangle neely suggests wave A takes more time than B....
I m still with flats since B took more time than A, C can take equal amt of time of A
Hi KRG,
Nice Post.
I am always amazed at the probabilities ,all valid, the market throws up. just emphasizes my limitations.
I am also not an 'out an out EW' player.I just look at the broader counts,(as the subminuette and near counts dont go with my positionals),so just try to go by the broader structure of waves and corelate with other indicators/common sense also, and check points of invalidations of probabilities to enter a practical trade.
I have a preference of the larger B (since 5177 was made and market moved to 5600) that should retrace the whole of the A (6338-5177),which also is given in my last ew post as a dark horse count.I am betting for it,because-
1. The markets have retraced almost 25% of the whole runup since march 09.so enough to call it near a big'A' .(may be with more say till 38% if doesnt breaches the 5700 mark on the up now)
2. The weekly chart is oversold ,ripe for a bounce.This chart never went in O/S zone so much since oct'08.Hence a bounce for the 'B'
3. The distribution can be done only with buying coming in,hence the slide cannot be in straight line.Breaching of 5700 on the up will again make people optimistic and 'buy on dips' types ,so good for a 'C's initial leg.
4. What EW helps in my trade is give me probabilities,ability to me flexible,objective,some targets and above all a broder sense of positional trade that i take.
Any ways practically, what ever proves right,one has to trade his belief , preserve capital, get profits by the counts he follows.
Regards
Jazz: (1) The triangle RV was suggesting was of a larger degree, i.e., 2008-9 as A, 2009-10 as B and now into C from 6377. Even I was thinking that we might see a triangle in this degree becos I thought long term low is in place at Oct 08/Mar 09. On Neely's B vs A, perhaps it might be posssible if it is an irregular triangle
(2) The triangle I am proposing is a kind of diagonal/expanding "C" as part of the major "B" from mar 09. Almost everyone seem to suggest that a new bear has started, while I feel that the major "B" is yet to end. The alternative I gave above in the first comment fits with the scenario what RV is proposing
Cheers
Today's action seems to be significant since it moved above 5624 (the low of 2nd wave in some of the blogs I am watching); meaning thereby that the current is not a "4" (since it entered 2's zone)unless it is a terminal. Also it would cast a doubt on the "running 2" argument in the bearish alternative. We therefore seem to be back to atleast the x wave argument targeting 5800 (62% of ABC between 6180 & 5177) or higher. More bullish would be the end of ABC at 5348 on 21st March. How many triangle reversals do we keep seeing? Very interesting indeed...
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