DJIA - CAN FED SAVE U.S. EQUITIES FROM THE FINANCIAL TSUNAMI

Hi Friends,

In it's latest meeting on 18th Sept. 2013 the Federal Reserve unexpectedly refrained from reducing the $85 billion pace of monthly bond buying, saying it needs more evidence of lasting improvement in the economy and warning that an increase in interest rates threatened to curb the expansion.

So the message from FED is clear that it cannot Taper QE until Economic Conditions Improve. So it's clear that only QE is holding the U.S. Equities Up and not the Economy. But how Long FED will continue the QE? Probably Bernanke would never Taper, retire and leave the mess for the next elected person. Bernanke's term is ending at the end January 2014. So we might witness a policy change with the next elected person.

Wave Analysis:-

DJIA

Though there is uncertainty over the FED's Policy Decision and likely Future Economic & Market Outlook; Chart Patterns are suggesting a Financial Tsunami or a Huge Bear Market Crash in DJIA for the next 2 years.

As mentioned in my previous post DJIA seems to be in Expanding Pattern since 2000. The Rally from 2009 Lows looks a Corrective Rally and not a Directional move or an Impulse.

The Rally seems to be in its final phase with Intermediate Degree (Y) in play. DJIA has Strong Resistance near 16100 and upside looks limited. The Strong Negative Divergence in RSI on weekly charts is suggesting a possible Trend Change. Such Divergence was earlier witnessed at 2000 & 2007 Top. Break below 15000 will indicate medium term trend change. And break below 13660 will invite a huge downside back to 2009 Lows and even Lower to 5670.

At this point of time such a Forecast will sound absolutely ridiculous. But the current pattern on DJIA shows a high probability of test of 2009 lows. Such patterns have occurred in past on DJIA. There is no hard and fast rule as to occurrence of the similar pattern will produce similar price action in future. But we simply cannot ignore this pattern.

Trigger for this pattern to come true will be break bellow weekly Channel i.e. currently near 13660.


Thanks & Regards,

Harsh Dixit.

GLOBAL MARKETS

Hi Friends,

Lets look at the Global Markets which are Ready for a Long Term Trend Change.

NIFTY

NIFTY

As mentioned in the previous post a close above 6060-6090 has invalidated the previous count. The move from 5118-6142 has retraced more than 78.6% of the fall in faster time. So it doesn't qualify for a correction of the previous fall. So a little change in short term counts.

Nifty seem to have completed (C) Wave at 6229 & the Fall from 6229-5118 was (D) Wave of the Larger 'C'. Current move seems to be'a' of (E) and Nifty might retrace in wave 'b' to 5798-5811-5833. And then 'c' of (E) might head to 6249-6289-6311.

This view will be valid until Nifty holds 5798-5811. A close below 5798 would mean end of (E) at 6142. Then I would be looking for a fall sub 5000.

In short term though Nifty might have upside towards 6300 I would stick to the Bearish view 
starting from October.


DJIA

DJIA

As mentioned in my previous post DJIA seems to be in Expanding Pattern. The Rally from 2009 Lows looks a Corrective Rally and not a Directional move or Impulse.

The Rally seems to be in its final phase with Intermediate Degree (Y) in play. DJIA has Strong Resistance near 16000 and upside looks limited. Break below 15000 will indicate medium term trend change. And break below 13660 will invite a huge downside back to 2009 Lows.


DAX

DAX

As mentioned in my previous post Germany DAX seems to be in huge sideways pattern since 2000. Currently it seems to be in Cycle Degree Wave 'D'. With Z underway inside(Y).

DAX seem to have completed Z and upside looks limited to 8900. Close below 8100 will be Indication of a Next leg downward in Cycle Degree 'E' Wave which could take the Index towards 5000.


FTSE 100

FTSE 100

As mentioned in my previous post FTSE 100 seems to be in huge sideways pattern since 2000. Currently it seem to have completed Cycle Degree Wave 'D' With Intermediate Degree (Y) seems to be complete at 6875. 

FTSE 100 may not have much upside potential above 6700 in wave 2. Break below 6500 would be initial indication of start of minute degree wave 3. Close below 6100 will be confirmation of a Next leg downward in Cycle Degree 'E' Wave which could take the Index towards 4000.

Thanks & Regards,

Harsh Dixit.

FATE OF I.T. STOCKS

Hi Friends,

While the Broad Market has been slashing since Jan 2013 I.T. has been the place to hide. I.T. stocks are outperforming the Market and have produced superior returns over a year. But How Long This Out-performance will continue?? Technical charts suggest this I.T. Boom is perhaps over and I.T. stocks are ready to take a hard crash over a year.

BSE I.T. INDEX

BSE I.T. INDEX

The Index seem to have completed a Huge Diagonal and looks ready tumble from the sky. Upside if any looks limited to 8200.. But the Index faces huge Downside risk of 4500 over a span of 12-15 months..

HCL TECH

HCL TECH

HCL seem to have completed its 3rd Wave inside Extended (III)rd Wave.. And it may now retrace to 850 in 4th of the Extended (III)rd Wave. 5th of (III)rd may again head towards 1100. Post Completion of (III)rd stock may fall to 670 in Wave (IV).

INFOSYS

INFY

INFY seem to have completed the corrective Rally in B/X Wave at 3173.. Stock is taking resistance of the Long Term 2-4 trend-line.. And upside looks very limited to 3210. The stock is expected to crash to 1200-1000 in it's Y/C Wave over next 12-15 months.

TCS

TCS

TCS seem to have completed a 5 Wave move from the 2009 lows.. 5th achieved the Wave Equality to 3. So the Stock might be ready to correct to 1160 over next 12-15 months.

WIPRO LTD

WIPRO

WIPRO seem to have completed the corrective Rally in X wave at 492. And upside looks very limited to 500. The stock is expected to crash to 270 in it's Y Wave over next 12-15 months.


Thanks & Regards,

Harsh Dixit.

NIFTY - POWER OF ELLIOTT WAVE

Hi Friends,

In my last post around 5200 I mentioned about a Fierce Rally to 5800 and higher based on the observation of Elliott Wave Pattern and the implication of similar pattern in 2011. Within no time Nifty Rallied to 5957. It Almost retrace 78.6% of the Entire Fall from 6229-5118. So what next?

As mentioned in my last post this Fierce Rally seems to be a corrective Bear Market Rally. As per my preferred count Nifty seem to have completed (x) Wave at 5957. Now it shall resume the downtrend and may witness a Huge Sell off sub 5000 in next 2-3 months in (y) Wave.

NIFTY

Nifty has Trendline and Fibonacci Resistance at 5991 and upside if any looks limited. Current pattern is similar to 2011. RSI is showing Hidden Divergence which is early indication of possible Trend Reversal. In 2011 too Nifty Retraced around 78.6% of the previous Fall in (w) Wave and Developed Hidden Divergence on RSI around 4945 in April 2011. Later Nifty fell badly towards 4700 in (y) Wave till August 2011. So we may witness similar Sell off to 4700-4800 till end of December 2013.

In Short Term a Close below 5815-5795 will indicate a Trend Reversal. As per Wave Equality Nifty is expected to fall to 4845 by end of December 2013 considering the Top at 5957. In case of Wave Extension Nifty may witness Sell off to 4545 or 4420 or even lower.

Current view will be invalidated only if Nifty closes above 6060-6090. A close above 6060-6090 will change the short term view. Still in Long Term I would stick to my Bearish views for Market. The Broad Market has already topped out in Jan 2013. But the Index is not reflecting the true picture. Index is trading at Highs due to few heavy weight stocks which are comparatively trading at the Highs. But soon these stocks will start tumbling too. In a year ahead the Banks, I.T., FMCG & Heath-care stocks are expected to fall from 40-70%. Which will drag Index lower.

Thanks & Regards,

Harsh Dixit.