Sunday, July 31, 2011

Game Changing Week possibly ahead

The coming week is rife with multiple possibilities. The Deadline for US Debt deal is August 2nd and any delay out there could spell doom for the markets. Lets explore all possible Technical and Fundamental Factors.

1. I had a look at the Elliot Waves and they paint a somewhat bleak picture in the near term.

Assuming the rise from 2252 to 6339 was Wave 1 and Wave 2 started in November 2011.
Wave 2 will be sub divided into A, B and C.
Wave A was 6339 - 5177 = 1162 (November beginning to Feb beginning a period of 3 months)
Wave B was 5177 to 5944 (Feb beginning to April end a period of almost 3 months) and Wave C commenced from end of April.

C -1 was 5944 - 5196
C - 2 was 5196 - 5740
C -3 on going

If this is the case then C-3-2 will end soon and the dreaded C -3-3 will start with a massive gap down.

A Wave was about 1200 points so C can be 1200-1800 points giving targets of 4200 and 4800. This will be the buying opportunity of a life time.

2. India Infoline is coming up with Debentures offering up to 11.9 % interest per annum. A small exposure can be considered.

3. Gold is sustaining at new highs. In case of a sharp dip when debt deal gets announced, it would be a buying opportunity.

4. The 5500 - 5700 Range has been broken giving a target of 5300 as first target. 5400 would be a support area and shorts can be covered here and fresh shorts taken on bounces.

5. Event based trading is always difficult and one should always trade hedged.

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