Nifty - Elliot Wave Update

Nifty is undergoing Wave 3 in the larger timeframes which started in October 2008. Wave 3 is the largest and most trending generally and should take the Nifty to levels of 15000 by 2014-5.

Fibonacci in action - Crude and Nifty

The above charts show the significance of the 61.8% Fibonacci retracement in Crude and Nifty Futures.

First Crude hit a high of around 148 in July 2008 and a low of 32 in December 2008. The 61.8% Fibonacci retracement of this fall is around 105 which proved to be a resistance for Crude in the last few weeks. In the last few days it has broken past this resistance so expect prices to rally further from here.

Nifty hit a high of 6350 in Nov 2010 and a low of 5175 in Feb 2011. The 61.8% retracement of this move is 5900 which is where the Nifty is facing resistance since the last few days.

Dollar Index in a downtrend

Dollar Index seems to have broken down from important trendlines and support levels. The trend is down in the Dollar Index which could be bullish for Equities and Commodities

Death Cross in Nifty

In the Nifty 50 DMA has crossed below 200 DMS. This is potentially bearish. But like all other things in technicals it is not a 100% confirmed indicator. We need to see Nifty breaking down below 5400-5600 range and also below 5175 before getting bearish on the market.

Right now we have been in 5400-5600 zone for over 2 weeks and so a big move in the Index is expected. Which direction it will happen that the market will guide us. So have a close eye on the 5400-5600 region.

Global Indices and Commodities Update

The risk markets (like equities and commodities) have all corrected and the risk averse markets like Treasuries and Dollar Index have been rallying as a result of the Japanese situations

Global Indices

SP500 has closed below 50 DMA and a key support zone at 1300. So it could very volatile here It has support at 1182.

Dow Jones has support at 11000.

Nikkei – obviously been devastated because of the Tsunami. It has support at 8800 but if that doesn’t hold the next support is at 7000, a level which we tested twice in 2008/09. The Kobe earthquake in 1994 led to 30% decline and stopped at a 1992 support zone of 14000.

FTSE has support at 5500 levels.


Commodities

Gold – key level to watch are 1400 and 1380…break of these numbers gives a target of 1300…and break of 1300 is very bad for gold.

Silver had strong resistance at $19 which it took out in july 2010 . Silver could reach a target of $39-40 but its becoming a crowded trade as everybody is bullish so its time to be a bit careful.

Crude Oil – the next support is at 96$..which is 50% retracement of rise from $85 to $107

Base metals – have all corrected below support zones and are expected to be sideways with a downward bias till the situation improves.

Nifty Update

• Longer term trend will turn up if we close above 5800 and turn down if we close below 5175
• Intermediate trend will turn up if we close above 5600
• FIIs have stopped selling in a big way so that’s a positive

Cardamom bearish, support at current levels

Cardamom is in a downtrend. But we have support at current levels of 1050. We might see a small bounce from these levels. But the larger trend is downwards.