Tuesday, June 21, 2011

Is Nifty in a Bear Market?

As the last standing bulls get washed with the head & shoulders, the mighty bear roars (check-out the Pic at the third eye). A return to SHS breakpoint (5350) has now to be watched carefully.

Though there was no impulse in the falls from 6377 & 6184, the last fall from 5900 does look impulsive and could have ended the major B that started in March 09.  The profile trader marks this alternative here. This has to be a very bearish case since the major pattern is ending at a lower high, the subsequent down move has to be aggressive and may not just stop at the SHS target (of ~4750). 


Do the bulls have any hope left? Doesn't seem to. However, I would like to point out one factor that may still hold in favour of the bull, i.e., the fact that the initial move off the March 09 lows was very sharp. While this could have been the first of the triangle (see above), ideally the "e" should have been comparable to "a" (neutral triangle) or "c" (expanding triangle). And usually the pattern should have drifted on the side of the break. That brings me back to my earlier theory. At what point of time can one stop treating the entire move from May 09 as a complex "running" correction something like this....?

If we are looking at a running correction may be we can expect it to stay above the first upmove (i.e. 1 or A as above). This comes to about 4750, so lets say that this is the last line in sand (the first being 5177, the previous low). It is ofcourse quite possible to look at a corrective "C" since Nov 10 or Jan 11, instead of the impulsive one and drift to a larger degree triangle.

My preference: Neutral on break of 5177 and watch the speed of 4750. If we consolidate around 5200 and make higher lows, I would like to shift back to the "running correction" theory.


AAR VEE said...

Nicely put post KRG.
Below 200dma and after 50-200 death cross little is left to say that we are in a bear mkt whatever count we are following.
Though i will like to stick to my preferred count giving me right direction and money.
Conservative target for downmove is apprx. 4800 and if extends then to 4000 levels !!!.
Only hope for the bulls is the ultra bearish calls .I hope many put fwd the bullish case below sub 5000 levels for bears to make merry.

KRG said...

AAR VEE: Thanks. Totally agree on the targets and the fact that the only hope for bulls is the extent of bearish calls.. In fact,I feel that the "price" is not really bearish (as we are yet to reverse the May 10-Nov 10 rally fully), but the sentiment and the mood seems ultra bearish. So is fundamental news (inflation, political scams etc, vulnerable rupee, high interest rates, aggressive RBI and so on). A nice situation for a squeeze....

Jatin said...

Hi KRG here 2nd corrective is taking more than 262% of first so this cant be valid under neowave terms..

manu said...

krg..i m with u..

dont worry..
frm rv blog
manu said..,
all red and me blue..

keep watching Bn..
if v go below 10340 then i will think
of pink not even red..

KRG.. i m with u..the triangle still exists..

cant say abt this expiry but when ppl write ce naked..they need a bath..

5400pe got a bath now ce turn ..
moral of d story ..dont bath naked :)

rmbr one thing fall s still n low volumes..

KRG said...

Jatin: I am not too sure on implications of the time element between the first two segments of any structure. As per Neely's presentation (1997), in trending moves, it seems to be allowed. In correctives it is given as a rare situation. I also thought expanding triangle is a good bet but the "e" seemed too small. Anyway I am not an expert on Neely as I go more by the feel of the essentials and donot have mastery over all his rules.