27 March 2010

Nifty : Reaching for the Top

Last few posts about the expected weakness in Nifty after a bounce has been proved a false alarm, which has led me to change my wave count. The new count which I am presenting below has come into existence because of the recent price action which has led Indian Markets to near its January highs, and the way things are going we are more likely to make a new high sooner than later.

In short term we are a lot overextended and that is the main reason we cannot see Nifty having a runaway rally, which can force investors and traders a to buy in a panicking fashion. I feel we should see a sharp correction pretty soon which can take us between 5050 and 5100. This correction will not only cool things down it will give the new money a better opportunity to buy stocks, and should take Nifty to new highs of this rally.

The chart above shows the new wave count and also a potential cup and handle formation if we correct from current levels. The count that is specified gives us a target of 5630 for the final 5th wave. But if we deal with only the 5th wave shown, we can expect the 4th wave of this 5th wave to end between 5050 to 5100 and 5th wave to reach a maximum of around 5520.

In summary the current wave count gives us a TOP in the Nifty at 5500-5600 in the most optimistic case. As for pessimists, in case this becomes a failed 5th wave, we have already seen the top in January!


plenipot said...

Not sure how 3rd wave ends at the point mentioned in the chart. Difficult to fit the waves considering the dip in November which makes the entire wave 3 marked in the chart more of a corrective pattern.
Even if it is not corrective, there is overlapping of wave 4 and wave 1 within the wave 3.

would really like to know the thought process behind this counting

Tarique Anwar said...

To start with the assumption is that the july dip is marking the start of a new 5 wave structure which I am sure most wave counters will agree with. Also let me tell you that not all wave patterns are very clear cut and obvious. The fact mentioned about 4th wave not entering 1st wave is only for impulsive diagonals, though I have come across contradictory information on this. Anyway, this is just a count and we should be open for any other as long as this holds true as well. Can you let me know how you count the current structure.

there is a whole lot of thought process behind this count and this space is too less to explain that.

plenipot said...

Guess these days most people are too possesive about their own wave counts :-) never intended to question your thought process.. just wanted to know it.. thats all

anyways the simpler the thought process the better..is what i feel and i am not on your blog to challenge your interpretation. you have a right on yours as much as i do on mine.

the whole question came up because i couldnt make out the internals of 3rd wave in the given chart. i know that not all waves are clear cut but i feel they should adhere to basic rules and that is why i wanted to know how to fit-in the November dip within the larger 3rd wave (which is impulsive)

The other interpretation could be that 4th wave completed in July,5th wave in mid October. After that Wave A could be a 3 wave ending in early Feb followed by wave B which is currently in progress. Problem with this count is that wave B seems to be subdividing in 5 waves, which could mean that the entire interpretation is wrong. If it is not, Wave C down should follow

Tarique Anwar said...

let me say that i too am in the quest of the right count, so will gladly accept any or all counts which seem to be correct. the other alternative counts that i myself have are making the current rally look like wave 1 of of a new 5 wave structure! which also doesn't fit the system. i think i need to get an expert advice here. i think the waves are hiding more than they are revealing about the stage of market. your counts as you yourself say are having flaws. so i guess we need to let the market itself tell us where its going!

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