In a truncated week of trading, the markets fell about 2 pc to end at 5574 which is below its previous low of 5583. Is it a time for a bounce? Let us try and explore what the markets have to say.
Last week, I had mentioned of 3 probabilities:
I would give the 3 probabilities, following % chances of coming true:
1. Wave C-4 continuing till 5450 - 5525 (40 pc)
2. Wave C5-2 in progress till 5625 (40 pc)
3. Major wave down till 4000. (20 pc)
Probability 2 is now firmly ruled out. So, now either the market bounces from slightly lower levels or continues falling.
The reason I feel we are in for a bounce are:
1. The FIIs bought almost 900 crores last week. The DIIs sold marginally. This means there is no selling pressure.
2. The sentiment has not been damaged. There were good auto sales with Maruti and Hero Honda posting record sales on Dhanteras.
3. The markets have technically closed just the week 5 week low ema and generally do not spend much time below this level inn bull markets. The next week could well be the make or break week for the markets.
4. The gap from 5435 to 5528 has acted as a major support and should act as support once more.
5. Technically we are in wave 4 correction of major wave C.
4 A was 5815 - 5583
B was 5583 - 5777
C is ongoing and either wave C-a is coming to an end or the entire 4 - C is ending. Either ways a bounce of at least 100 points is on the cards.
People can go long with a stop loss of 5525 for the short term traders. I still believe we are in for a year end rally to 6000-6200.
Last week, I had mentioned of 3 probabilities:
I would give the 3 probabilities, following % chances of coming true:
1. Wave C-4 continuing till 5450 - 5525 (40 pc)
2. Wave C5-2 in progress till 5625 (40 pc)
3. Major wave down till 4000. (20 pc)
Probability 2 is now firmly ruled out. So, now either the market bounces from slightly lower levels or continues falling.
The reason I feel we are in for a bounce are:
1. The FIIs bought almost 900 crores last week. The DIIs sold marginally. This means there is no selling pressure.
2. The sentiment has not been damaged. There were good auto sales with Maruti and Hero Honda posting record sales on Dhanteras.
3. The markets have technically closed just the week 5 week low ema and generally do not spend much time below this level inn bull markets. The next week could well be the make or break week for the markets.
4. The gap from 5435 to 5528 has acted as a major support and should act as support once more.
5. Technically we are in wave 4 correction of major wave C.
4 A was 5815 - 5583
B was 5583 - 5777
C is ongoing and either wave C-a is coming to an end or the entire 4 - C is ending. Either ways a bounce of at least 100 points is on the cards.
People can go long with a stop loss of 5525 for the short term traders. I still believe we are in for a year end rally to 6000-6200.
Technically the study seems well. But, the events following also need consideration. Lok Sabha could be in for some turbulence starting 22nd. Also, the Global picture is getting weaker with much of developed world struggling with multiple problems.
ReplyDeleteWave formation in itself is quite questionable. Since interpretation depends on individual view basis.
I would love to have a techno-fundamental analysis each week then just technical analysis.
I agree with you. The problem is Fundamentals do not change every weel. As and when possible, I do try to incorporate fundamentals also.
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