Sunday, January 1, 2012

Nifty in 2012 . Is it the 'CheckMate' Year ??



Please read this Post in continuation with the Broader perspective shared at the last Analytical Write up - CLICK HERE , where the Bearish Insight was presented. As I was going through the Year end data and charts , few more things corelating with that view caught  'The Third Eye' . 


1. Symmetry in Charts :




Leonardo Fibonacci , W.D. Gann , R.N Elliott , Harmonic pattern Traders  and for that matter all great Scientists and Artists believed and based their works in Symmetry of some kind , Cycles , its repetition etc .

Above is a simple chart with the interpretation of a Fast Fall to complete the Symmetry as I see it.

Though I have successfully traded many Symmetries and Fractals on the charts without applying any Technical Analysis , this may be just my manifestation of the Bearish view I believe in now .


 2. Moving Averages and Pivot Points :



he 50-200dma Bearish Death Cross and it's implications is well known . We are now also below the 200 week Moving Average ( not 200dma its 200wma )  after whipsawing it few times on closing basis (this has been brought to notice in a previous post also ). Now appx. 4850 is the 200 wma . No sustainable Bullishness expected till consistent
trading above this mark. 

Also as you can see in the chart , we have broken the previous 2 year low Pivot along with the 200wma and now closed below it again . Its a sign of weakness and has Historical Bearish results whenever Market does so.


3. Elliott Wave Analysis :


EW is used by me to determine the Larger Trend on Daily charts and as the Reference Posts on the sidebar of the Blog suggests , I have a Bearish take on it .

The  Chart above  represents the most Bearish Probable count , that of the start of C wave of the third zigzag in 5 subwave structure down ( I have few valid alternate counts also that I am tracking as , still in wave B of the third zigzag , Triangle in the wave B , Ending Diagonal after XX , etc ). 

The Point of Invaildation of the above count is at 5100.


 4. FII Data :


The dependence on FII's and their liquidity to push our Markets is well known . FII's withdrew in excess of $4 billion from Indian Markets . In fact as a Report today suggests that in Emerging Markets the max. outflow of FII money was in Indian Markets. There is a suggestion in the Report that this Data may be flawed and actual outflows may be in excess of $5 billion.

Check the Report - CLICK HERE

Is it just the 'Hot Money' running away or something Fundamental is changing that general Public is not aware of . Why they are not buying when Valuations looks great to TV analysts and 'Indian Growth Story' is hailed by majority Big Names in Investor and Fund management community . Is it another 'Great Indian Rope Trick' ? 


5. Pattern :

 


The Chart Pattern that may be forming, owing to the symmtery shown above, may be a Bearish 'Rounding Top ' , with Target of the level from where it starts.

Instead of a ' Top ' I prefer to call it a ' Topi ' , as in a Hindi slang-'Topi Pahnana'   , meaning to Cheat or Deceit ,  which It will be if turns out true for maximum retail traders and small investors.


6. Financial Astrology :

 This is an offtake from a Financial astrology Blog of Christopher Kevill , who is a neo-vedic astrologer - 


" Overall, 2012 looks like another difficult year for the markets. The current configuration of Jupiter-Saturn alongside Neptune and Uranus may well exercise a negative pull on markets into February. Jupiter will take over for a while after that and could bring a good relief rally into March. But the problem is that Jupiter will weaken after March while Saturn remains quite strong through much of the spring. This greatly increases the likelihood for more troubles in the financial world during Q2. To make matters worse, we will have an exact square aspect between Uranus and Pluto in June. These two distant planets only form aspects quite rarely so this aspect is definitely one to watch. Generally it is considered bearish and disruptive to the status quo. Since markets don't like uncertainty, we can expect to see some fallout from this aspect near the middle part of the year. This aspect will last through much of 2012 and will tend to create more upheavals and uncertainty. If anything, 2012 looks like it may be worse than 2011 in terms of global market performance."

For a caution ( in his own words ) -  " The margin of error in financial astrology is depressingly huge. "



More over with some fundamental issues of Inflation , growing Fiscal deficit , High Interest Rates , slowing Industrial Growth and GDP ,  Governance paralysis for new Reforms , Strengthening Dollar , ticking Euro Issue timebomb , and  collapse of trust in the present Financial system across the World , it seems difficult for a Bullish Reversal as of now .


To conclude ,

This is a Probable scenario  that is explained in the above and previous mentioned post for readers to be cautious in Trading and Investing going forward. Though it may well turn out to be a false alarm but its better to take this high probability scenario along and look objectively at Invalidation Signals for the above if trading against this bias.

 I will request Traders to only believe in the Price on the screen and Charts in the coming months . Be sure that the Markets will do the most obvious move in least expected way giving the pain to majority of the Participants.

Investors, if on sidelines , should wait for some Bullish signals to be seen and not fall for the trap of Bottom Picking .

Some levels of invalidation for this view and signals are in the previous post - 
CLICK HERE    

Now if the above scenario holds true then -


Either Prepare to turn this probable  'Adversity into an 'Opportunity '  , else wait for relief till 'PETA' ( People for Ethical Treatment of Animals ) starts their  ' Save The Bull ' campaign .

 
Have a Profitable Year Ahead !!! 

22 comments:

Nilesh said...

Great and Alarming Analysis AAR-VEE sir, it is definitely helpful for learner like me.
Thanks Again.
Regards,
Nilesh Patil

Sandeep said...

Hi RV,

A very Happy & Prosperous New Year to you. Very kind of you to alarm us on the eco-financal conditions and caution us. Thanks

Cyclone said...

Hi Aarvee....

A very HAPPY NEW YEAR to u....

Kumar Technicals said...

Dear RV!

Very well presented your views, keep it up. You are really one of the most dedicated technical analysts.

Rgrds,

Kumar

Sahilraj said...

Many many thanks sir ji for the post.

AAR VEE said...

@Nilesh ,

Thanks ,hope it helps.

@Sandeep ,

Thanks for the wishes and your comment.

@Cyclone,

Thanks for the wishes,I reciprocate the same for u.

@Sahilraj,

Thanks for leaving the comment.

@Kumarji ,

Thanks for visiting the Blog and giving your appreciative views.

Your ever encouraging comments are confidence boosting.

Regards

Alpesh , Daxesh said...

Dear RV,
i think..it may be b-B with A ended @ 4532 , B ended @ 4800 & C ended @ 4588 .... now we steel c-B up side
whats probeable tgt for nifty now.
am i right direction or not?
plz guide me & give yr suggestion
regards,
Alpesh

AAR VEE said...

@ Alpesh,

will update on weekend in an EW post with different probabilities I am following as mentioned in the post.

KRG said...

Hi Aar Vee: Fast fall & Symmetry Scary!! I was more hoping that 3800/3900 and mid-2012.. B4 that a decent sized rally to ward off the heavy duty bearish talk all round

Rupee, Bonds, Equity all look attractive enough. We require the politics part of the "political economy" to work....

rani patel said...

fantastic analysis.can you please tell me what software you use? I am in particular facinated by the price volume chart you put up. where can I access that?

AAR VEE said...

@ KRG ,

Thanks for sharing ur views. Some fibonacci time series analysis and cycles are indicating that markets may bottom out near mid 2012 .Not studied the time aspect .The above post is a general caution for the direction and levels with points of invalidation. I too hope that may be another 3-4 months to reach there as the symmetry shows.

Regards

AAR VEE said...

@Rani Patel ,

Thanks for the comment.

I use ,Chart nexus(free,eod) and I-charts (paid ,realtime) for analysis and trading.

Volume profiles (volume at a price)upto 10days TF can be viewd free on 'volumedigger.com' ,the link to which is at 'My Trading Diary' on the sidebar.

Regards

AAR VEE said...

@ Alpesh ,

Not updating the EW post as of now.The B wave trading (since 4640) in a probable Triangle looks interesting.

Alpesh , Daxesh said...

Dear "RV"
plz explaine were we r heading in wave countting?
regads
Alpesh

AAR VEE said...

@ Alpesh ,

In short term since 4532 we may be in a zigzag corrective up which may now be in its last leg (C=A=270=4860 apprx). It may even extend to near C=1.62 A .4795 is now level of invalidation of the upmove.

Larger TF counts have many probabilities both bullish and bearish.

piyush sharda said...

rv how are u labelling on daily frm 5400..
5400-4531 as abc or u r labelling them as one set of 5 waves and then frm 4531 correction of this 5 waves..

or 5400-4639 a, irregular b continuing, then c in zigzag.

AAR VEE said...

Hi PS,

Daily from 5400 is in triple zigzag ,now in B wave still it seems (though 1-2,i-ii of C also open).

Trade in B wave has many probabilities, One probability is that A ended at 4640 apprx. a-B at 5099,b-B at 4532 now may be in c-B.so looking only at A-B-C from 4532 now.C=A over but looks like a 5th remaining .

piyush sharda said...

thanx a ton rv for ur view

viji1975 said...

Sir, Wish you a Happy Makara Sankranthi. I request you to kindly give/update your weekly views in this blog.

Vijayakumar V

AAR VEE said...

@viji -

Thanks for ur wishes ,I reciprocate the same.

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