Future Stars of Nifty

Nifty has entered consolidation zone with a range of 7200-7500. Heavy profit booking was seen at 7500 on past two occasions and the level will offer stiff resistance. The downside however should be limited as correction in a bull market is normally a sideways consolidation.

Nifty heavyweights Reliance and ONGC have encouraging charts as the trends  make a bullish alignment pattern  on the daily charts with the long term trends showing strong bullish strength. The current sideways move in both the stocks is a brief pause before they start their upward journey and propel Nifty to higher levels.

Why the Nifty and many other emerging market stocks screamed “Buy!” three months ago - Elliott Wave International

Elliott Wave International, in its recent Asian-Pacific Short Term Update, echoed our views about Nifty and the Indian Stock Market expressed in our earlier posts.

Here is the link to the EWI article : Indian Stocks: You Want a REAL Opportunity? Know WHEN to Look for It

The Meteoric Rise of ABAN Offshore

ABAN started a wild upmove  from May 13, 2014 when it was priced at  Rs. 515 to reach Rs.684 today and still counting. The present upmove started after a strong consolidation at Rs. 500 levels, when the intermediate and short term trend conclusively crossed over the long term trend. The following hourly chart shows the present upmove :

In fact ABAN was one of the first movers for the current bull run when it started making the moves in Nov- Dec. The move was first captured by TTO on December 6, when we had projected a target of  Rs. 500 for the scrip. It has now well surpassed that target to move higher.  The following daily chart captures the entire upmove from December till date :

Some Big Movers of This Rally

Below are the charts of some big movers of this rally, which came out of the range and rode the bullish alignment pattern :

Nifty Targets 7500-600 Achieved, 10,000 next !!!!

   

Time to rejoice for investors in India as Nifty today achieved the target of 7500-7600 projected by us recently. Nifty spot today touched a high of 7557 and Nifty Futures touched 7601 to complete the targets.

Its a day of euphoria for the Indian markets as they break the shackles of stagnancy and move ahead to unchartered territory. Our long term Nifty target remains 10,000 which we had projected in March, 2014.

We were amongst the early few to identify the bull market, as early as March 7, 2014, when the dooms dayers  and skeptics were projecting the Nifty to fall to 3800-4000 levels. While technical analysis helped us identifying the bull market, our advanced technical research and Triple Trend Oscillator  gave us the confidence to identify and pick up the trend early.

Here are some of our earlier posts which projected the bull market well in advance :

Nifty heading for 7500-600 ??  (May 8, 2014)
Emerging Markets to begin New Uptrend. (April 29,2014)
Nifty Inverse H&S  (April 22, 2014)
Why FIIs are Bullish on India (April 10, 2014)
A New Bull Market  (March 26, 2014)
Modi Wave or A New Bull Market ( March 7, 2014)

The fall of India VIX

Traders were flummoxed by the sudden fall in India VIX from 38-39 levels to 29-30 levels, a fall of almost 25%. More so, because everyone expected the VIX to remain high till 16th May and even after, till the formation of the new government.  In fact many predicted the VIX to touch even 45 levels.

In our earlier post  India VIX   dated  April 25, 2014, we had predicted the VIX to rise after it had corrected to 31 from 37. It did rise thereafter to 38-39 levels only to fall back to 30 in a sudden and sharp move. This fall was not accompanied by any fall in the Nifty indices.

The VIX daily TTO chart below shows how hourly VIX had developed a negative  divergence and fell below the daily trend even while the VIX went up to touch new highs of 38-39. This explains the sudden fall in VIX which is likely to take short term support at 31 and any fall below is likely to take it to 24.

The sideways move in VIX may continue for sometime till the entire short term correction plays and is ready to move up again in near future. In the following weekly TTO chart of VIX, the trends have a aligned in a  bullish formation which indicate the possibility of the VIX rising higher once the short term correction plays out. Traders can position themselves for the next upmove.

Positive Correlation with Nifty 

Since the inception of India VIX this is the first time where the VIX has developed positive correlation with the Nifty i.e. a rise in the indices is accompanied by a rise in VIX. In all previous occasions, the fall in Nifty was accompanied by a rise in VIX.

Reliance Achieves Target

Reliance achieved its short term target of 1070 as projected in out earlier post dated April 20, 2014 Weekly Breakout in Reliance .

Time for Caution !!

In our  research paper Triple Trend Oscillator - Technical Insights we talked about synchronized bullish alignment of major, intermediate and minor trends.   An alignment of trends in the three time frames can result in a major impulse move in a relatively short period of time. High leveraged and safe trading positions can be created if the exact timing of such a move can be identified. 

The main requirement for such an impulse would be :

1. All the three trend i.e. major, intermediate and minor should be placed above the zero line.
2. The three tends should be bullish i.e. rising.
3. The minor trend should be placed above the intermediate trend and the intermediate trend should be placed above the major trend.
4. The trigger line should have crossed zero to generate a buy signal.

In the following daily charts with TTO, the bullish alignment satisfying the above conditions is clearly visible with the resultant quick price movement in Nifty.

The last few weeks, Nifty has been riding on the bullish alignment pattern suggested above. However, the short term trend represented by the twin lines has started developing negative divergence. Though the weekly charts continue to hold price target of 7500-7600 with the inverse H&S formation, in the short term caution would be advised.

With Nifty running up in anticipation of the poll results, profit booking is likely post the event and Nifty may not give much upside from hereon in the short term.With the rapid rise in the short term, the  indices could be forming an intermediate top unless the divergence is negated.

While a new  bull run is firmly in place and we were able to detect the same as early as in March ( see our earlier posts)  it would be prudent to hedge your profits to ride with Nifty for higher levels in future.

Nifty heading for 7500-7600 ???

With the election process nearing an end and results round the corner, the question in everyone's mind is - Where is Nifty headed??  The market is jittery, almost on its knees and the VIX is rising high again.

Nifty continues its consolidation/ correction after reaching  its new high and presently have found support at 6650. The following daily chart shows the weakening hourly trend (the twin lines) which continued to fall even while the indices was making a new high at 6850 levels. This was a clear indication that a short term top was in place. The indices also broke the lower end of the channel at 6720 which gives it a technical target of  6550 which coincides with top of wave 3. In the event of  6650 broken we may see further fall of 100 points to 6550. The hourly trend has fallen into bearish territory and is yet to show any signs of strength/ divergence.

In the following weekly chart of Nifty once can see the hourly trend (black dotted line) in negative zone. However, the weekly (dark green line) and the monthly (light green line) trends continue to show strong intermediate and long term strength with a bullish alignment pattern. The reversal of hourly trend above zero is likely to result in a massive spurt in indices to reach higher targets of 7500-7600, which is also the technical level due to be achieved for the inverse H&S formation as indicated in our earlier post   Nifty Inverse H&S of April 22, 2014.

As can be seen above the Nifty weekly chart displays the hourly trend , apart from the daily, weekly and monthly trends which represent the minor, intermediate and the major trends respectively. This has been made possible by our pathbreaking Triple Trend Oscillator.

USD - INR Technically

The Rupee has come off the highs of  it had reached  67-68 it had touched against USD and presently stable at 60. The RBI would be comfortable to keep Rupee at the present levels, but it may strengthen to 58-57 in the short term. The following daily chart shows how the levels of 68 was achieved during Sept 2013 with a negative divergence in the TTO. Ever since, the daily trend continues to languish below the weekly trend.

USD-INR  Daily

The following weekly indicate that the correction may not be over yet and one more down move may be pending which can take Rupee to 57-58 levels. Further, The chart does not show any divergence for the impending reversal.

USD -INR Weekly

The following long term and monthly chart the continuous long term bullishness of USD vs INR. Post the correction, INR is likely to weaken and move towards an immediate target of 68-70. The crossing of the dotted line above the zero line will be the first indication of the next leg of the upmove.

Tech companies may have a good time ahead !!

USD-INR  Monthly