NIFTY WEEKEND ANALYSIS

Hi Friends,

In my last post I mentioned about possible pullback Rally on Nifty to 5870-5970. Though Market has invalidated previous counts, Nifty is still on its way to 5870-5970.. 

Since the structure of the fall from 6112 is of corrective nature we may assume this fall to develop as double or triple corrective & reach 4500 or lower by Mar/Apr 2014. Still for this projection we need break below 5250 or the channel support as initial confirmation. That might take another 4-5 months.

On short term Nifty looks to be in Wave 'a' of (b) starting from 5500 which is near completion. On Intra day chart we can clearly see 5 wave move up from 5500 which might be complete at 5794. Or 'v'th may extend to 5840-60. And Nifty might take pause and correct to 5690-5670 before Rallying further to 5970. However, assuming this Fall from 6112 to develop as 'W' the Rally from 5500 looks to be 'b' Wave of corrective nature and might be sold off to 5250-80 in 'c' of W later in May.

The above count is valid until Nifty holds 5670 and/or doesn't break above 6030. In either case we may look for some other alternative.

As a trader we may hold Longs with stop of 5745. And must take profits if Nifty rises further near 5840-60. Those Interested in short may take short below 5745 for target of 5690-5670. Positional shorts to be carried only if Nifty breaks below 5670 in faster time.

Thanks & Regards,

Harsh Dixit.

NIFTY ELLIOTT WAVE UPDATE

Hi Friends,

In my last post I mentioned about possible decline on Nifty. And indeed Nifty has been sliding down since End Jan 2013. So question here arises is - has Nifty started its Bear Move? We shall get the answer in next few weeks.

As per Traditional TA Uptrend looks over since Nifty has breached the 7 months Upward Channel. And now only corrective pullbacks might be witnessed on the Index. As per my Preferred EW Count too 5 wave sequence looks over at 6112. 

I have been maintaining my stance that Entire Rally from 4531 is part of Corrective Bear Market Rally which is 3 Wave Corrective. And Nifty has indeed followed the guidelines for Corrective Waves as the Rally is Bounded by Channel. So 2013 is likely to see much Larger Decline & Index may breach 2011 low of 4531 by End 2013.

On a Yearly Time Frame entire Rally from 4531 which looks to be (b/x) wave looks complete at 6112.   And the decline from 6112 looks to be a start of Bear. In case of decline in (c) wave it shall develop as an Impulse and in case of (y) wave it may develop as Double or Triple Corrective.

Since The decline from 6112 doesn't look to be an Impulse; its not yet clear whether Market has Started the Bear move in (y) wave or yet to complete (b) wave.

On a Shorter Time Frame a Corrective looks complete at 5632.. Market looks Oversold and there is +ve Divergence on RSI. So Index might be ready to Bounce of the lows.

 Wave Structure -

(A) Assuming that Bear has started - 

In this case Nifty is likely to decline in (y) wave which might develop as Double or Triple Corrective. The decline from 6112-5664 looks to be 'a' wave. And currently Nifty looks to be in 'b' wave which might be developing as an Expanded Flat. Of which move from 5664-5971 looks to be 'a' leg and flat 'b' looks complete at 5632. Now Nifty shall move in 'c' leg Up which shall develop as an Impulse & reach 5970-6030 by April 5th.. Similar pattern was witnessed in End 2010.

(B) Assuming that Nifty is yet to Complete (b) Wave -

In this case Nifty is yet to Complete 5th wave from 4770 & likely to Head to a New High around 6247-89. In this case The Following (c) wave shall develop as an Impulse. In this case decline from 6112 might be a 4th wave which might have developed as 'wxy' Corrective. And Nifty shall head to New High around 6247-89 in 5th wave closer to Higher Boundary of Larger Channel by 21st April.


A move above 5691 shall be initial indication of Trend Change and move above 5792 shall further confirm the start of Short Term Up-Trend.

In any of the above 2 possibilities a larger Decline to 5200-5300 is expected once the Up-Move gets over. Hence Investors shall use this Rally as last chance to liquidate their Investments.


Thanks & Regards,

Harsh Dixit.

KEEP IT SIMPLE STUPID (KISS)

Hi Friends,

Today I'm sharing this article on the Principle of KISS. A must read for every Trader.


The ability to simplify means to eliminate the unnecessary so that the necessary may speak… "Hans Hoffman."

The 14th Century Franciscan monk William of Occam formulated a concept that provides the basis for many present day scientific theory and models. This concept, know as Occam's razor, states that, given any competing sets of solutions for a problem, the explanation must be made in terms of what is already known. That does not necessarily imply that it will be the most simple explanation (although it often is!), but it will help you focus and alleviate anxieties and endless frustrations trying to figure out what you don’t know. Focus on what you do know, and use this knowledge to carry to further into study so that you become an expert in whatever you are trading. The more you know about one particular stock, future, commodity or currency-- the more quickly you will come to creative mastery. The more you will be able to simplify.



The founders of Alcoholics Anonymous called this the KISS (Keep It Simple Stupid) solution. This principle can be applied to nearly every facet of life and trading, and is positively correlated with experience. The more you know about any subject, the quicker you will be able to find elegant and simple solutions.

Your brain lies to you day and night in the most convincing and deceptive ways imaginable. If you are finding yourself challenged, confused or messed up in your trading or in your personal life it is for one reason: Your best thinking got you there.

Those who are the most confused in the markets right now are those who are reading newsletter after newsletter, site after site, pundit after pundit trying to find a reason for "WHY" things are happening. Everyone has something to say, to write, to postulate or theorize about such situations as "Why are the markets rallying when the economy is so bad? Who is buying into this rally? When is it going to end? Where is the correction? What is going to happen?" Well, since you don't know, you look everywhere until you find an answer that you like. Usually this is an answer that agrees with your beliefs—a simple expression of what is called “confirmation bias.” How can you know what you don't know when you don't know what you don't know? Why do you continue to look outside of yourself to other people for answers that they don’t have but are delighted to sell them to you—often for outrageous prices and promises.

Markets are made because people have different opinions. This is how it should be. If everyone thought the same way, believed the same things—there would be no markets. For example—in the futures markets (basically a zero sum game—but not quite)—for every buyer there is a seller. This means that you are trading your beliefs against the beliefs of those who disagree with you. You know that your beliefs are correct if your position is making money.

What is correct? Who is correct? The answer is simple. The markets are correct. IF you are underwater in your positions and in the hold and hope mode, you are not listening to the markets.

Why are you tormenting yourself trying to "figure it out" when the answer is simple? Remember that the greatest secrets are always in plain view. It is happening because it is happening. All of the mental and intellectual tricks (neurotic defenses, thinking biases) that you play on yourself are for the purpose of easing anxiety over a situation that you do not understand. Often, the more you search for answers, the more anxious you become. You are the problem and you are the solution. It is just that simple. Stop trying to figure it out. Accept that it is happening and act accordingly. Learn to respond, rather than react. If price is going up, it is going up and that is that. Go with it and continue with it until it stops going up. If price is going down, go with it until it stops going down.

The easiest way to gain discipline is to reduce everything to its most simple parts. Dissect, declutter, and get simpler. Please stop trying to turn a game of probabilities into rocket science.

What might Occam say to you about trading?

There is way too much noise. Turn down the noise in your mind and on your charts. Trust yourself to see what is in front of you. Markets do not lie; people do. Do not be fooled by highly intellectual explanations for why things are or are not happening. Listen to the voice of the markets.

Wisdom in trading is manifest through simplicity. The more complex you try to make this, the greater the probability that you will lose. The market speaks in probabilities. Do not try to change this language by making it one of certainty.

If what you are doing is working, keep doing more of it. If it is not working, get out and go back to basics. Find an edge and keep sharpening it. Disciplined traders win. Emotional traders lose. In the battle between discipline and emotion, the disciplined massacre and plunder money from the emotional.

Simplicity is the ultimate sophistication…"Leonardo da Vinci."

This article is written by DR. Janice Dorn. She is believed to be the only Ph.D. (Brain Anatomist) , M.D. (Board-Certified Psychiatrist and Addiction Psychiatrist) and Graduate of Coach University in the world who actively trades, writes commentary on the Financial Markets.

Thanks & Regards,

Harsh Dixit.