Cash The Chaos

Nifty(4851): Finally, the long awaited relief rally kicked in and the markets are relieving the oversold levels. I do not think market should have any problem going above last weeks high of 4873 but if it doesn't its bearish and the powerful wave down is still incomplete. The ideal levels for this relief rally to roll-over to the downside are at 4901- 37 and 4983.

Nifty hourly chart

As per my time series analysis, December 8th(+ or - 1 day) points to an important high or low. I'm going with the probability of this being a low for two reasons (a) As can be seen from the chart above red wave 5 is still pending ; (b) Seasonally, December is one of the best months for India and India has not had a negative December for the last 9yrs. Hence, if we have a low on December 8th, markets could still be seasonally bullish and have another relief rally.

Ok now to yesterday's post - On yesterday's post - I had intentionally left an error, hoping one of you, particularly the Elliott Wave fans amongst would point to this error. The correct chart is here:

Nifty Daily chart - EW count

Now you EW fans- can you guys tell me what was the intentional error that was planted on yesterday's chart? I was just checking if you guys were paying attention to these notes 🙂

Open positions:

Silver: Short @$34.2 with revised stop at $33.5, partially booked @$31.4

Apollo Tyres: Long @64 stop 59, Target 71

Hero Motors: Short @2025 stop 2130 Target 1900 (greater bearish potential beyond 1900)

PS: I'll be on CNBC this morning. Will talk about Apollo and Hero if they ask about specific recommendations.

Nifty(4706.45): The move from 5325 has been one of the strongest 'extended' waves I've have seen in recent times. When a market extends so strongly, relief rally that follows such extensions tend to be quite weak. So given this technical backdrop, the odds of this market exceeding 5000 now looks quite low. The ideal level for the relief rally to stop would be 4985, assuming the low markets made yesterday holds.

Supports remain the same: 4650 and 4530

Resistance are projected at 4790 and 4835

Open position(s):

Silver: Short with revised stop of $33.5 from $34.2

Positions closed yesterday:

Nifty November Long Guts(4900 put and 4800 call): Opening spread 184; Closing spread 250

Nifty(4778.35): Given the ferocity of the decline from 5325, let us re-visit the big picture of Nifty and see where we are in the larger trend.

Nifty - Daily Charts with wave count

The speed of the decline is definitely of that of a third wave, which we have been marking as one on the daily updates. The possibility that we might still be in the 3rd wave in the bigger picture too is now a possibility. The implication of that is that there might one more leg of decline like the decline from April to August, after this downward leg is complete. This would work well with our call for INR 57+ to the dollar. It is also possible that green circled area shown on chart is a wave 4 of C of green Y. Either case, Nifty should drop closer to 4400. If Nifty breaks 4720 without a pause, the odds that we are still in the third wave (purple 3) would gain more weight. We will update on the bigger picture as things evolve.

Short term: Given that Nifty has been relentlessly dropping from 5325 to 4764, it is very doubtful it may have the energy to break the big support of 4720. A bounce to 5000+ would be the bare minimum but as we have been seeing extended waves are very difficult to pin down. In case, 4720 is broken supports to watch are at 4650 and 4530.

Open positions:

USDINR long from Oct 21st - Take profits here today (52.3 was November Fut close) - RBI will come under intense pressure to intervene. We will get in on a pullback for the next target of 57+

Silver - holding with upgraded stop of $34.2. Take Partial profits @$31.4

Nifty Long Guts: November with a debit spread of 184-188.

Nifty(4934.75): Once the important support at 4985 gave way, markets got rattled and a quick swoon followed. It was a combination of stop triggering and put writers of 5000 strike stepping in to cover their positions. What we had labelled as blue wave V turns out to be an extended blue wave iii. And only now the blue wave v of the red 3 seems to be in progress.

The supports for the markets are likely to be found around 4860 and 4830 the former gap left post the October 4th low. One fibonacci relationship ratio between blue wave iii and blue wave v also exists around this level. On the hourly charts, there is a fair amount of positive divergence developing and this is normally a precursor to a relief rally. Needless to say we will look to sell into it and the former target area of 5150 ballpark still holds good. But that is a few sessions away. If you are trying to create short positions, keep your position size small.

Open positions:

Long USDINR from Oct 21st revised stop 50.05 (November fut) -(partially booked day before yesterday)

Short Onmobile Global tgt 52 and beyond stop 62 at close

Silver Stop $35.7, revised stop $34.2

Silver had a big drop last night and this morning went below $31 in the asian session (currently at 31.5)

Nifty(5068.5): It was highlighted here yesterday, that 5115 would offer some temporary relief to the market and a breach of that level would signal a further fall to 5045. Nifty opened lower paused at 5120, bounced gently, consolidated in a small range above between 5120 and 5160 and broke through the morning to clock a low of 5053 for the day.

Nifty Intraday charts

Yesterday's price action as greatly reduced the dip from 5400 being a corrective drop and hence we are labeling them as 1,2,3. First things first, if you are short, today's open or the first one hour might be a good opportunity to take profits, either fully or partially (We nearly got our 5045). The red 4 shown on chart has either started or about to start and it is going to be a bit tricky to  nail the end of this wave (most corrective waves are). Here is the broad idea - once again it looks unlikely that we will see a move beyond 5220. BUT, there is a small possibility that during this corrective rise, we might see a path as shown in the chart, with a small dip below 5000.  OR the morning session takes Nifty to either 5011 or 4985 and the red wave 4 starts from there. We all wish there was an easy way to nail the exact low 🙂 Don't we?

Open positions:

Long Reliance Nov 2011 840 put from 12

Silver Short with stop at $35.7 from $34.2

Hindustan Zinc Nov Fut Short from 122.5

Nifty Short from Monday morning ( close this today during the first 15mins or 5035-45 whichever comes first)

USDINR Long from 20-Oct-2011 stop 48.3