Monthly Archives: August 2012

S & P 500: The Turning Point ?

August 31, 2012
Short Term Analysis
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Analysis of several charts in last few years has helped me identify one very important characteristic of almost every pattern in wave theory that I use as a THUMB RULE:
ALMOST EVERY PATTERN BEGINS WITH SIMPLICITY AND ENDS WITH COMPLEXITY
This is what I am observing right now in the pattern of S&P 500 which began at the bottom of 1075 in October 2011. The pattern looks like a contracting triangle with
reverse alternation. This means that waves A, C, E reduce but wave D is bigger than wave B. Unlike a typical contracting triangle, here the trend lines are either parallel or
expanding.

I am interpreting the ongoing wave E to be a combination of two diametric patterns connected by x-wave. One can easily observe the degree of complexity in wave E
compared to waves A and C. For me this looks like an ideal situation for termination of a long term pattern that began last year.

If so, things are not looking good for the US markets (and in turn the world markets) irrespective of what Mr. Bernanke does.

NIFTY: Triangle or Terminal Impulse

August 29, 2012
Short Term Analysis
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As discussed in my last post on NIFTY, the market has topped on 23rd August at 5448 and declined by about 150 points till now. I have not used the word crashed by 150
points since it has taken almost four days to do so.
Still the point to note is that the crack has begun just before the apex point and the triangle count holds true only if NIFTY goes below 5032 in the next few days preferably
before 7th September 2012.

An argument contrary to the validity of a contracting triangle is that wave e crossed the top of wave c. But as per NEowave theory the contraction is still valid since wave a,
c, e go on reducing in size and wave d is smaller than wave b.
Also wave b has taken 71 days compared to 30 days consumed by wave a. Such a large difference is generally not observed in triangles. But their are certain fibonacci
relations in these waves. We find that wave e = 0.618 times wave c and wave c = 0.618 times of wave a. Similarly in case of the counter-trend moves wave d = 0.382 times
wave b. There is a substantial alternation between waves b and d (i.e. differences in their price, time and complexity) which is required under NEowave theory.
I am still considering both the possibilities:
i) non-limiting triangle, which only the market action should confirm in the next few days. If not, then it may be
ii) a terminal impulse whose wave 4 is in progress and wave 5 is yet to follow.

If so, it will only postpone the IMPENDING CRASH.

Basic Concepts of Elliott Wave Theory

August 27, 2012
Wave Theory Simplified
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A trade is executed in a stock market (in fact any market) when the buyer and the seller agree upon a price. Stocks of several companies are traded at different prices in a
stock market during its trading hours. Stock exchanges all over the world have defined some indices that include certain number of stocks. e.g. Bombay stock exchanges
SENSEX is composed of 30 companies whereas National stock exchanges NIFTY includes 50 companies. These indices are calculated on the basis of weighted market
capitalization. Index value of 100 has been considered as the base value of the SENSEX corresponding to the market capitalization of the thirty companies in the year
1978-79, treated as the base year. Todays SENSEX in the range of 17000-18000 means the market cap has increased 170-180 times of that of the base year.
Now if the values of these indices are plotted against time on a daily basis then different price patterns emerge. Since the index includes highly traded fundamentally sound
stocks we assume that it indicates the overall mood of the market participants and their perception of the economy. Thus these charts of indices are the graphical
representation of mass psychology.
Elliott wave analysis is a study of these price patterns. NEowave theory is actually NeelysExtensions Of wave theory that includes Glenn Neelys several new ideas and
discoveries.
BASIC CONCEPTS
Before I discuss the basic concepts of wave theory, I would like to define three fundamental characteristics. Each pattern defined under wave theory has one of these
characteristics.
i) Directional Pattern: This type of pattern is fast moving that covers a lot of price in a short time. I also call this as Price Consuming pattern.
ii) Non-Directional Pattern: This pattern is slow moving that takes a lot of time but covers a small price range. I also call this as a Time Consuming pattern.
iii) Semi-Directional Pattern: This pattern consumes both price and time.
Please note that the above-mentioned small price range, short time etc. are relative terms i.e. relative to the surrounding market action in the chosen time frame.
TYPES OF WAVES
All price movements on a chart can be broadly classified into two categories.
1) Impulsions (Impulsive Waves): An impulsive pattern is made up of five waves (also called five legs) numbered 1-2-3-4-5. Waves 1,3,5 are in the direction of the main
trend and waves 2,4 are opposite to the direction of the main trend. There are two types of impulses.
i) Trending Impulse: This is a directional pattern in which waves 2 and 4 do not overlap. This impulse can begin a pattern or end a pattern.
ii) Terminal Impulse*: This is a semi-directional pattern in which waves 2 and 4 overlap. This impulse cannot begin a pattern. It can only end or terminate a pattern and
hence called a terminal impulse.
2) Corrections (Corrective waves) : These waves are always opposite to the impulsive waves. The waves that form corrective patterns are usually named by letters A, B,
C, D, E etc. Corrective patterns have the following types.
i) Three Legged (A-B-C) Pattern
a) Flat

b) Zigzag

ii) Five Legged (A-B-C-D-E) Pattern

a) Contracting Triangle

b) Expanding Triangle

c) Neutral Triangle*

iii) Seven Legged (A-B-C-D-E-F-G) Pattern

a) Diamond Shaped Diametric*

b) Bow-Tie Shaped Diametric*

iv) Nine Legged (A-B-C-D-E-F-G-H-I) Pattern

a) Symmetrical Pattern*
Out of all these corrective patterns only zigzag is a directional pattern. All the other forms are non-directional.
* marked patterns are great discoveries of my distant Guru Mr. Glenn Neely.
I shall discuss each of the above mentioned patterns in detail (with their interesting variations and charts) in my future posts on this blog.

NIFTY
August 22, 2012
Short Term Analysis
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The rally of NIFTY for last 17 days from the bottom of 5032 seems to be requiring more and more effort to cross the previous day high and to sustain above it. Probably
there is still some steam left in it.
Typically in a non-limiting triangle pattern, I mentioned yesterday, the price trend tends to move closer and closer to the apex point (shown in the upper chart) before
terminating. Also the volumes are usually high in wave a of the pattern and go on diminishing during the successive legs, which also is clearly visible in the lower chart.

For this triangle pattern to be valid, this uptrend should terminate anytime in the next 10-12 days i.e. before reaching the apex point.The triangle will be said to be over if a
swift move (called the thrust) breaks the b-d trend line and takes NIFTY below 5032.
If it happens so, this downward move will become the first part of the succeeding pattern.
If not, it may take some more time to complete another possible pattern called terminal impulse mentioned in my article posted yesterday.
Till then, let us wait and watch.

Current Status of Indian Economy: A Wave Theory Perspective

August 21, 2012
Short Term Analysis
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Applying wave theory to stock market index charts is not an easy task. The interpretation of a price pattern can vary from analyst to analyst. Glenn Neelys NEowave theory
tries to eliminate this subjective nature of analysis.
Point Zero (The Starting Point)
The most important question that arises before one analyses a pattern using wave theory is which is the starting point of the pattern? Unless an analyst uses the right point
to start the analysis, the interpretation of the pattern that follows can completely go wrong.
Neowave suggests that one should look for the biggest and the fastest move on the chart in recent times. This should be decided by comparing with the earlier price
movements in a particular time frame. One should use a big move on daily chart to analyse a pattern only on daily chart only because such a movement on a daily chart may
not be an important starting point on a weekly or a monthly time frame.
If we consider the NIFTY cash daily chart for last two years, then we find that the fastest and the biggest move occurred in January 2012.

Let us mark the low of 4695 on the Nifty (Jan 09,2012) as point 0. The upmove that followed up to the high of 5630 (Feb 22, 2012)was one single wave called wave `a`.
The downward wave that followed from that high to the low of 4770 (Jun 04, 12) forms wave `b`.
The recent upmove from this bottom can present itself in two possible forms. It could result in a single `wave c` consisting of five parts (called Terminal Impulse), shown
below.

Another possibility is a non-limiting contracting triangle beginning from January, as shown below.

I shall discuss the above mentioned terminal impulse pattern, non-limiting triangle and many more patterns in my posts at a later stage.
For the time being let us observe the market action in the next two weeks.

Monthly Archives: September 2012

S & P 500: Impending Top ?
September 22, 2012
Global Indices, Long Term Analysis
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In my last article on S&P 500 posted on 31st August 2012, I had discussed a combination of two diametric formations on the daily chart. That time the last leg i.e. wave g
of the second diametric was about to commence. The up move from September 4 forms this wave g.
The US Federal Reserve Chairman Mr. Bernanke announced QE3 on September 13 that pushed many stock market indices all over the world to their new 2012 highs. S&P
500 managed to cross its 2008 high.
But now, this euphoria seems to be fizzling out with S&P 500 not able to cross that high of about 1475 in the last five trading sessions. Whether it is consolidating or
distributing remains to be seen in the next few days.

The longer term picture is shown on the weekly chart. This also seems to be a diametric in its last leg, wave G. Once it is over, a new bear market should begin sooner or
later.

A fall bigger than wave F, which is about 150 points on the S&P, will confirm the commencement of a MULTI-YEAR BEAR MARKET.

NIFTY: Terminal Impulse (Modified)

September 21, 2012
Short Term Analysis,Uncategorized
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In my last write-up about terminal impulse pattern, I had mentioned The validity of this pattern will be threatened only if NIFTY crosses 5645 (cash). And NIFTY did
cross this mark.
Now it is always better to modify the pattern labeling as minimal as possible unless the bigger picture is not justified.

The bigger picture seems to be a FLAT pattern that has 3 legs a, b and c, discussed in my last post also. Maintaining the same overall configuration, I have modified only the
labeling of wave c.
Within wave c, wave 2 is now subdivided in three parts and assumed to end at a higher point (earlier wave 4 position). This imparts strength to the move that follows i.e.
wave 3 in this case. The violent wave 3 in progress justifies this assumption.

Wave c that is in progress right now can take a few more weeks to complete and can easily attain higher levels as implied by the momentum it has right now. The ideal time
wave c may take is the total time taken by waves a and b together. That projects the ideal turning point in Time to be around second week of November 2012.

NIFTY: Terminal Impulse

September 14, 2012
Short Term Analysis
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I discussed in my last post how terminal impulse pattern took over the non-limiting triangle pattern. Wave 5 of this impulse seems to be on.
The validity of this pattern will be threatened only if NIFTY crosses 5645 (cash). The reason for this lies in the fundamental rules of wave theory. The rule says that in any
impulse pattern wave 3 cannot be the shortest among waves 1, 3 and 5.
If we add the length of wave 3 to the end of wave 4, we get the figure of 5645. That means wave 5 has to terminate before reaching 5645.

In case NIFTY crosses this point, then the pattern developing is NOT terminal impulse but something else.
It is always better to follow what the market does rather than trying to predict, all the time, what it is going to do.

NIFTY: Terminal Impulse overrides Triangle

September 7, 2012
Short Term Analysis
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In my last write-up on NIFTY, I wrote Still the point to note is that the crack has begun just before the apex point and the triangle count holds true only if NIFTY goes
below 5032 in the next few dayspreferably before 7th September 2012.
Today, on 7th September, we find that the market hasnt crashed below 5032 and on the contrary has again started moving up. Secondly if triangle had terminated at the top
of 5448, then the post pattern move (called thrust of the triangle) should have violently broken the b-d trend line without any hesitation and moved along the red line (as
shown).

In the absence of the above mentioned characteristics the five wave terminal pattern now overrides the triangle and will take a few days to complete.

Now we need to wait, may be, for the next 2-3 weeks for this pattern to get over.

Monthly Archives: October 2012

S&P 500: Reversal of Trend?
October 30, 2012
Global Indices
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Last post I wrote The daily pattern looks more like a distribution rather than a consolidation. That has turned out to be so till now with S&P coming very
close to its crucial support level of 1396.56. This was the value from where the last directional action had begun, marked as wave e on the chart

The hurricane Sandy forced the US markets to remain closed on 29th and 30th October. If markets reopen on 31st October, the crucial level to be watched
right now is 1396 on the S&P. If the index breaks that level and accelerates downwards then we can be almost sure that the bull run is over. If not, then there
is still some steam left.
Do you agree that the value of 1396 on the downside is crucial psychologically ?

S&P 500: Consolidation or Distribution?

October 21, 2012
Global Indices
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Last week I wrote In spite of closing below 1430, if S&P does not accelerate downwards then the interpretation would change.
S&P 500 did rally thereafter and made another futile attempt to make a new 52 week high. It managed to make only a lower top of 1462.2. We find, as shown
in the chart below, that from the successive tops marked T1, T2 and T3, the index is reacting more and more swiftly. This behaviour is typical of a distribution
pattern rather than a consolidation pattern. In other words, the pattern developing is more like a reversal rather than a continuation pattern.

The structure from June 2012 bottom is becoming more and more complex. I have again modified slightly the pattern presented last time. We also observe
that the bear candle on Friday, 19th October is the biggest in last 4 months, thereby questioning the upside potential of S&P.

If in the coming weeks S&P again rallies with increasing complexity, then instead of continuously altering the daily structure labels we shall start focusing on
the weekly structure that I have presented earlier.

This is a diamond-shaped diametric formation on the weekly chart.

A fall below 1266 on the S&P, preferably within the next 3 months would confirm the end of Bull Market that began in March 2009.

S&P 500: End of Bull Market ?

October 14, 2012
Global Indices
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Recent drop of S&P 500 this week has threatened last three and a half years bull market. I had discussed the ongoing pattern of S&P to be a double
diametric formation that I am presenting here with a small modification.

It is the first time from the low of 1266.74 in June 12, that a rally has been completely retraced in shorter time, raising doubts about any further steam left in
the up trend. Further, the second diametric seems to be over at a lower top and the latest close on Friday is below the previous low of 1430 (end of f wave
on chart).

On weekly chart of the S&P, this weeks candle is the biggest bear candle in this entire up trend from June 2012 bottom.

Also S&P has not been able to surpass the high of 1474.51 made on 14th September 2012 after the FED announced QE3. This has happened in spite of all
the good news in terms of unemployment and confidence data.

If S&P continues to slide further in the next few weeks and crashes below the June low of 1266.74 then thats a bad news for the American and in turn the
world markets. This may signal the beginning of a multi-year bear market.
In spite of closing below the recent low of 1430, if the index does not accelerate downwards in the coming week then the above interpretation will change and
we then need to wait for the market to present a different identifiable pattern.

NIFTY: Wave 3 probably over

October 13, 2012
Short Term Analysis
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In my last post, I had discussed a pattern called FLAT beginning 9th January 2012 (point 0). This pattern has three legs, a, b, c. We observe that the third
leg, wave c, is in progress. This wave, I have assumed to be sub-dividing in 5 parts (1, 2, 3, 4, 5). Wave 3 seems to be over at the top of 5815 on 5th October
2012, since the fall thereafter is bigger than any of the previous falls within wave 3.

Now, on a logarithmic scale, wave 3 is shorter than wave 1 in price. That means wave 5 should be even smaller. Of course there is still time for wave 5 to
begin.
If we take a closer look at wave 2, we find that it is an irregular failure FLAT pattern. The word irregular means wave (b) is longer than wave (a) and failure
means wave (c) fails to cross the end of wave (a)

The post pattern implication suggests that the wave that follows (wave 3 in this
case) should be longer than the preceding wave (wave 1). Since that has

not occurred there is a possibility that wave c may be terminal impulse pattern
in which wave 2 and wave 4 overlap. For that to happen wave 4 must drop to
5448 or lower on the NIFTY but should not cross 5217.
If wave 4 goes below 5217 then our assumption of a FLAT pattern
starting January 2012 is wrong.
We shall follow the market for the next few weeks to find out where this wave 4
ends.

Monthly Archives: November 2012

S&P 500: Bear Market Beginning with Expanding Triangle?
November 23, 2012
Uncategorized
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I had explained two possible scenarios, in terms of the wave structure labeling, for the recent fall in S&P 500. I had mentioned If we see a substantial bounce back taking
the index up to 1403-1434 range then expanding triangle is the preferred count.
S&P has rallied thereafter to close today at 1408.35. I am assuming this rally to be wave d of an expanding triangle (a-b-c-d-e). The sharp reversal that occurred at the
bottom (near termination of wave c) is a typical characteristic of an expanding triangle.

For this count to remain on track wave d must end in the range 1403-1434. If it crosses 1434 then this count and even the weekly structure has to be modified with some
relabeling.
If this count turns out to be right then within a few days, once wave d gets over, an extremely damaging downward wave e should get underway.
We need to wait for some more days to find which way the market moves.

S&P 500: Bear Market Begins Finally !!

November 17, 2012
Global Indices
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It is almost certain now that the bull market that began in March 2009 is finally over. The ultimate confirmation would come when the the index falls below its June low of
1266.74.
As I discussed in my last write-up, the mood of the market participants has clearly become bearish. It will continue to be so in spite of any good news or any desperate
efforts by the governments to prevent the fall.
I have always mentioned in my earlier posts that the move which qualifies for the beginning of a new trend should be simple i.e. it shouldnt be sub-divided. The recent fall
in the S&P has that characteristic. Secondly this is the biggest fall from the bottom of June 2012.
For the downward pattern, there are two possible interpretations in the short term. Either the new pattern has begun at top T3, because the wave following that has retraced
the prior up move in shorter time. The pattern then looks like an a-b-c structure up till now. The structure may be a part of a running expanding triangle a-b-c-d-e .

Another possibility is that the pattern may have begun at the top T4 and this could be just the first wave a of the pattern.

.If
we see a substantial bounce back taking the index up to 1403-1434 range, then expanding triangle(first chart) is the preferred count.
In any case the markets are likely to undergo severe damages in the near future.

S&P 500: The onset of a BEAR market ?

November 10, 2012
Global Indices
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<<<The level of 1396 on the S&P was finally broken this week. Observe the chart below. After wave b, once the market crossed 1396 (on the upside) on 7th August 2012,
it not only remained above but also hesitated to go below this for next 20 days. This was then followed by a huge bull candle. .

Now in the downturn again the market showed reluctance to cross 1396 for a few days but finally cracked below.

Now once there is a crack many are talking about the fiscal cliff and the euro zone worries.
But the point to note is that the index has made a top on 14th September 2012 on an extremely Bullish announcement of unlimited quantitative easing (QE3) by
the FED. A top formed on a very positive note is usually difficult to surpass for a substantial amount of time.
Due to the complexity of the structure from June 2012 bottom, I had mentioned in my post on 31st August 2012 that the markets are close to a turning point and a bear
market may begin irrespective of the FED action. That is what exactly has happened in the last two months.
On the weekly chart also the trend line joining the previous bottoms (D-F line) has been the cut and the index has closed below the line.

The mood seems to have clearly changed from bullish to bearish. Thats the reason the markets gave a Big Thumbs Down to president Obama getting re-elected.
For the big players, right now, ANY NEWS is just BAD NEWS !!

NIFTY: Wave 4 about to terminate

November 2, 2012
Short Term Analysis
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Last time I wrote that wave 3 within wave c of the ongoing Flat pattern in Nifty has probably got over. The index, since then, has not made a new high and has been
moving in a narrow range of about 200 points for the past 20 days. This, more or less, non-directional movement is definitely not a part of wave 3 but, on the contrary, forms
wave 4 which is correcting wave 3.

Once this wave 4 is over we can expect the last part of the impulse i.e. wave 5 to begin. Now since wave 1 and wave 3 are almost of same length (wave 3 is slightly longer
than wave 1), wave 5 can be expected to be much different.

Out of the two counter-trend waves, wave 2 being more time consuming and complex than wave 4, we can expect wave 5 to be short. It may just be 0.618 times of wave 3
in length. In that case wave 5 may get over in the range of 5900-6000 on the Nifty. The corresponding range on the Sensex is around 19500 19800.
We may have to wait for a few more weeks for these wave 4 and 5 to terminate, that would end even a larger degree pattern.

Monthly Archives: December 2012

S&P 500: Expanding Triangle (contd.)
December 9, 2012
Global Indices
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We hold on to the expanding triangle scenario I explained last time. For the last 10 days S&P has been moving in a narrow range above 1403 but below 1434. The level of
1434 is crucial on the up side to continue with the same view.
Right now we are in wave d of expanding triangle. If that is so, wave e must break the bottom of wave c. Even though wave e of an expanding is large and violent,
usually it is slower than wave d i.e. it takes longer time to retrace wave d completely.

Wave d is already much longer in price and time than wave b which does provide perfect alternation between these two waves. Hence time is running out for wave d to
finish off. Wave e must start sooner than later this week.
If not, the market has something else in mind.

S&P 500: Expanding Triangle

December 2, 2012
Global Indices
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I wrote last time that bear market has finally begun for the US markets and the first downward pattern seems to be a downward sloping expanding triangle. We are right now
in wave d of this triangle. For this structure to remain valid S&P should not move above 1434 i.e. wave d should not become longer than wave c.
Till now the index is within the range of 1403-1434 in the past week. So we hold on to the expanding triangle scenario. Wave e must start sooner than later and must cross
the bottom 1343 and preferably 1266 thereafter.

In case S&P turns down but does not cross 1343 and on the contrary starts rallying again then this interpretation of the expanding triangle and in turn the bear market is
wrong. Such a behaviour would only mean that the bull market that began in March 2009 is not yet over and has some more price and time to consume.
Anyway we need to follow the market and cannot dictate its progress !!

NIFTY: The Last Rally ?

December 2, 2012
Short Term Analysis
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In my last post I had mentioned that wave 4 looks unfinished and is about to terminate. It took about 30 days for wave 4 to get over and wave 5 to begin. If
this interpretation is correct then this would be last wave and hence the last rally of the current pattern.

Beginning from January 2012 the pattern thus getting completed is called a FLAT pattern having 3 legs a, b, c. Wave c has sub divided in 5 parts 1, 2, 3, 4, 5 of which the
last leg wave 5 is in progress.
Alternate Possibility
In a FLAT pattern usually wave a is a violent and simple (i.e. not much subdivided) move. Wave b is usually time consuming and complex (subdivided). We observe both
these characteristics here. Wave c is impulsive and usually takes 50% time of a and b together. If wave c is a terminal impulse it may take time up to that of a+b.

In the FLAT pattern in progress, we find that wave ,c has already exceeded time of a+b in spite of being a trending impulse. Also point 0, 2 and 4 lie almost on the same
straight line which is uncharacteristic of an impulsive wave.

These things raise a doubt whether wave b ended at the point shown or it has ended at a higher bottom shown in the chart below. In that case wave 3 (and not wave 5) of
wave c is in progress.

If so,it is possible for wave c to continue its progress for a few more weeks.
If not, the current rally in NIFTY is the last one before the impending top.

Monthly Archives: January 2013

NIFTY
January 19, 2013
Short Term Analysis
1 Comment

The increasing complexity i.e. the overlapping and subdivided structure of the present rally confirms my view of Bull market losing momentum I discussed in my last
write-up.
It looks like the index is forming a terminal impulse pattern in wave 5 position. It is clear from the way the market is weakly pushing up that we are close to an intermediate
top. We can easily observe that wave 5, instead of moving away from the 2-4 trend line, is oscillating about the line.

If I remove the price candles from the chart and keep only lines representing the waves then this fact stands out even more distinctly.

To confirm this view, this slow overlapping rally must end soon forming a market top at least for the time being.

NIFTY: Bull Market Losing Momentum

January 9, 2013
Short Term Analysis,Uncategorized
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About a month back, in my last post on NIFTY, I had discussed an alternative possibility for the ongoing impulsive wave c. That alternate count seems to be more
appropriate if one has to follow some important rules of NEoWave theory.
One of them is a touch point rule, that says out of the points 0-1-2-3-4-5 in an impulse wave, not more than two points should lie on the same straight line.

Secondly, wave c usually can take a maximum time equal to that of wave a and wave b put together and that too when wave c is a terminal impulse.
THIRD most important point is the rule of extension in an impulse. It says that the longest wave in an impulse should be more than 1.618 times the next longest wave.
All these rules have to broken in the first alternative shown below.

With a shift in the termination point of wave b, shown below, all these problems disappear. Hence I am considering this to be a more appropriate pattern interpretation.

Now we find that wave c seems to be a proper trending impulse wave with extended wave 1. Further it follows the touch points rule also. It is also showing the
characteristic contracting shape of a first extension impulse wave.

Now the entire FLAT pattern from January 2012 seems to be developing as shown below.

If this interpretation is correct, then we are very close to an impending top.

Monthly Archives: February 2013

NIFTY: The Downtrend Begins

February 22, 2013
Short Term Analysis
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NIFTY topped at 6111.80 on 29th January 2013 on a positive but expected RBI policy news and has fallen thereafter by almost 300 points in last 18 days. With this fall we
can end wave 5 within wave c of the FLAT pattern that began in January
2012.

I had mentioned in my last write up that NIFTY should fall below 5865 before 14th February 2013. But NIFTY breached this level on 15th February. When I had a closer
look at the intra-day charts, it appears that the terminal impulse wave 5 had begun at 5898 instead and this has been retraced in less than 50% time as shown.

Hence I am assuming that the terminal wave 5, wave c (in five parts 1-2-3-4-5), and the FLAT pattern a-b-c all are over and a new down trend has begun. This will be
marked as wave E of the larger pattern that began in January 2008.

We can expect this down trend to continue at least for the next 8-9 months and break 5215 as mentioned in my last post.

NIFTY: Top in Place ?

February 2, 2013
Short Term Analysis
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A complete i.e. 100% and faster retracement of an up move in Nifty occurred after the top of 6111.80 on Jan 29, 2013. This probably confirms an intermediate top at this
point and also the end of a FLAT pattern that began about an year back in January 2012.
As I have already discussed in my last two posts that the c wave of this FLAT pattern was a 1st extension trending impulse within which wave 5 looks like a Terminal
Impulse that typically oscillated about the 2-4 trend line.

We can visualize this in a better way in the following diagram.

Further to confirm this terminal, NIFTY must fall below the starting point of the terminal i.e. 5865 in 50% time it took to form. That means NIFTY should break this level
before 14th Feb. 2013.
As per NEoWave observations, if wave 5 is terminal in an impulse pattern then probably the entire impulse pattern is retraced thereafter. This leads us to a conclusion that,
if my interpretation of the index pattern is correct, then NIFTY should even break the level of 5215 in the next few months.

This fall will eventually mark the beginning of another downward wave that would form the next leg of the huge consolidation pattern that began in January 2008.

We now continue to follow the market in the coming weeks to find whether its movements justify my stand.

Monthly Archives: March 2013

NIFTY: Wave E confirmed
March 10, 2013

Short Term Analysis

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Nifty confirmed the beginning of a downward wave by falling about 450 points, which is bigger than any intermediate fall during the rally from June 2012 bottom.
Thereafter the index has rallied by almost 300 points in just four days. This confirms that wave a of the down-move is complete and wave b has begun. This wave b
could turn out to be a Flat pattern, a Contracting triangle or even a Diametric. Right now, I can only say that the pattern in wave b position is likely to be a non-directional
one oscillating between two values of NIFTY (5663 and the other yet to be confirmed).

During my last few posts about NIFTY, many had doubts and queries about the structure I had presented for the entire FLAT pattern (a-b-c) from January 2012 to January
2013, especially the pattern in wave b position.
Wave b here is a Neutral Triangle having five legs from A to E as shown.

Neutral triangle being a newly discovered pattern under NEoWave, not much is known about its occurrence in real time charts, especially in Indian markets. I do not know
whether it can occur as wave b of a FLAT pattern, but I am assuming so. Since the pattern terminates at a much higher level (5217) instead of 4770, my only requirement
was a swift and violent break-out crossing the top of the triangle (5630). Since that has actually taken place as wave 1 of wave c, I am assuming that my interpretation is
fine.

As per NEoWave theory, FLAT pattern is the only place where wave b can consume substantially more time than wave a. According to Glenn Neely, time of wave b could
go up to 5-6 times that of wave a. In the above mentioned FLAT pattern, wave a has taken 30 days and wave b has consumed 137 days. In such a case wave c must take
at least about half the time of a and b combined i.e. 84 days. In our chart wave c has taken 98 days to complete.
If wave c is assumed to begin at 4770 instead of 5215 then several important rules like extension rule, touch point rule have to be broken. In general, I am not in favour of
breaking any rule.
One more aspect of the post impulse behaviour is that the 2-4 trend line is broken vilolently by the market confirming end of an impulse pattern. This is not observed during
the recent fall of NIFTY if wave c is assumed to begin from June 2012 bottom.

It appears now that in the intermediate term we are in wave E of the pattern that began in January 2008. This wave may roughly follow the path shown by the dotted line.

It remains to be seen whether it falls below 4531 or not in the coming months to decide what the larger picture looks like.
A complete reassessment of the presented pattern would be required if the index makes a new 52 week high (above 6112) in next few weeks.

Monthly Archives: April 2013

NIFTY: Wave D probably not over yet !!
April 28, 2013
Short Term Analysis
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The downward Diametric pattern that began on 29th January 2013 did make a bottom at 5477 on the day I published my last write-up but ended at a later date, at higher
bottom of 5500. I was expecting the following upmove to be an x-wave that retraces this whole pattern by not more than 61.8%. In that case the rally shouldnt have crossed
5861 on the NIFTY, but it did. Up till now it has retraced the entire fall by about 70%.

Consider two aspects:

1) The rally is violent enough to be mark the commencement of a NEW upward pattern and not a part of the downmove.
2) The fall from Jan 29 to April 10 is NOT BIGGER than the fall from January June 2012.
Both these things force me to reconsider my earlier labelling. I feel that wave D that began in January 2012 is not yet over. Due to the complexity on the daily chart we
observe this on a weekly perspective. It looks like a Neutral Triangle (in which wave c is the longest and usually the most complex wave) is developing. We are right now
in wave e of this triangle.

Wave c being quite complex wave e could be around 61.8% 100% of wave a.
This sets the target of 6150 6500 on the NIFTY in the next 3-4 months.
This view will be negated if the market suddenly reverses and breaches 5477 in the next few weeks.

NIFTY: End of 1st pattern in wave E?

April 10, 2013
Uncategorized
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Last time I wrote, wave E on Nifty Monthly Chart had just begun.

Till now the downmove has sub-divided and looks like a diametric formation with seven legs a-b-c-d-e-f-g as shown in the diagram. This is called a diamond shaped
diametric within which the pattern first expands and then contracts (as far as the trend lines are concerned). This pattern that began at 6111.8 on 29th January 2013
is probably over today i.e. 10th April 2013 at 5477.2 taking 49 days.

This would be followed by x-wave and then another corrective pattern. This x-wave may retrace this entire fall by 40-50 % but not more than 61.8% usually. That means we
can expect the index to rally to 5700 5800 levels and then remain range bound (5500 -5800) for a few weeks time before commencing the next downward move.

Monthly Archives: May 2013

NIFTY: A New Bull Run or A New Bull Trap ?
May 17, 2013
Short Term Analysis
1 Comment

NIFTY achieved its first target of 6150 this week, as discussed in my last post. The movement is still too simple i.e. too swift to indicate any topping formation. I still
continue with my assumption that the ongoing rally is e wave of a Neutral Triangle that began in January 2012.

The wave has yet not shown any loss of momentum eventhough stochastically the market is overbought on Daily as well as Weekly time frames. Anyway the market is not
bothered about that.
Now let us observe the same chart from a different perspective.
The current rally (wave e) has completely retraced the fall (wave d) in much shorter time. Such an action usually begins a new wave. Then is the consolidation phase from
Jan 2008 over and is the market entering a NEW BULL PHASE ? Many may think and even wish that to happen. But if you observe the larger wave D has taken more
time than wave C and has not yet retraced it completely to make a new all-time high.

Some may argue why not begin the new bull run from the end of wave d marked as point 0.

Let us observe this rally for the next few weeks. If you observe the red dotted trend line was breached by the market last week. This week also the Nifty has closed above
the line but has 50% of its portion is below the trend line. That means the market hesitated at this line. If the market begins a new move there should be no hesitation at all.
On the contrary the break occurs violently never to return to the line. This is an important aspect of technical analysis.
In the next one or two weeks, if the index again turns down and breaks the trend line we can be sure that this attention-seeking rally is NOT a New Bull Run but just a NEW
Bull Trap !!

Monthly Archives: June 2013

NIFTY: Bulls Are Trapped !!
June 1, 2013
Short Term Analysis
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In my last post on 17th May, I had mentioned about the possibility of a bull trap developing on the NIFTY charts. The failure of the indices to rally further for the last two
weeks and the continued hesitation at the trend line shown in the chart confirms such a trap.

On having a closer look at the NIFTY daily chart wave e (and consequently wave D) looks incomplete. The wave seems to be sub dividing and we possibly are in part
(b) of this wave. The entire wave e that began at 5500 on the NIFTY may subdivide as a-b-c or a-b-c-d-e.

We remain cautious at this point since there has been a faster retracement of the upmove 5970-6229 during the fall 6229-5936. As per wave theory the pattern looks
incomplete at the top, but such things can occur at the major turning points.
Anyway even if the wave developes into an a-b-c pattern, then there is still some steam left in the rally.
But then that would become an even worser TRAP !!

Monthly Archives: July 2013

RUPEE vs. DOLLAR: Tug of War

July 1, 2013
Currency
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This is my first post on the analysis of US Dollar vs. Rupee chart. I would like to make it clear that I have tried to interpret the wave pattern using wave theory and general
rules of logic, in spite of having a very limited data of free market conditions. As you know that charts of only those stocks, commodities or currencies can be studied under
wave theory where a large public participation is involved. We have seen such a participation in terms of trading volumes, only in last few years.
I am considering a monthly chart beginning from April 2008 at the bottom of 39.77 (point 0). Wave A took about an year to complete and made a high of 52.18 in March
2009. That was followed by wave B that retraced wave A by 61.8% and took a little over two years to terminate. Thereafter wave C is in progress for last 2 years now.

Wave C can be interpretted as a terminal impulse pattern visibly much more sub-divided than wave A. Waves ii and iv overlap and wave iii is shorter than wave i.
Wave v should therefore be smaller than wave iii. This means that wave v must end below about 63.5.
If this interpretation of terminal impulse is correct then the entire wave C should be retraced in less than 50% of the time it took to form.
This means if wave C is over in next few weeks then the US dollar should crash below 43.85 in about one year. Before that happens the dollar should breach the level of
53.73 in shorter time than wave v takes to terminate.
If the Dollar crosses the level of 63.5 vs. rupee then this interpretation is incorrect.
Last few years the fight is on with the Dollar dominating . We need some time to find whether the Rupee can turn the corner and emerge as the winner.

S&P 500: Impending Top ?

July 1, 2013
Global Indices
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On a weekly chart, S&P 500 seems to be developing a diametric formation that I discussed long back (November 2012). The index has continued its uptrend since then and
may be in its last wave G of this formation.

On a monthly chart S&P seems to be forming an expanding triangle that began in the year 2000. Wave (E) of this triangle is yet to begin.

It looks like we are nearing the end of wave G and wave (D) shown in the charts above. On a daily chart there seems to be still some steam left. After the consolidation
pattern shown, we can observe the formation of a FLAT pattern. Wave B of this pattern looks like a downward sloping expanding triangle. We are right now in wave C of
the FLAT pattern.

Since wave B is an expanding triangle, wave C is not likely to retrace it completely. Even if does, it would take much more time than wave B. Wave A and B are similar in
time, hence wave C would take much longer time around 8-10 weeks to complete.

NIFTY: Topping formation ?

July 1, 2013
Short Term Analysis
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In my last post, I discussed about bulls being trapped near the high of 6229 on the NIFTY. That turned out to be true and wave (a) from 5500 to 6229 was followed by a
severe correction (almost 100%) in form of wave (b). Wave (b) seems to be a diametric formation that ended on 26th June 2013. Wave (c) is in progress thereafter.

Waves (a) and (b) being similar in price and even time, wave (c) may become a terminal impulse pattern consuming substantial time of about 10 weeks (time of a and b put
together). This entire structure then would probably become a FLAT pattern enclosed by the white channel shown.

Eventhough wave (c) has started with a big bang covering 300 points on the NIFTY in just 3 days it would probably fizzle out. But since wave (c) is expected to be TIME
consuming (than PRICE) the non-index stocks (mid-caps and small-caps) may outperform in the next few weeks.