09th nov 2010...

Happy Diwali

here's wishing a very Happy Deepavali and prosperous new year to all the friends and readers of valuetrading.

very long term chart of gold...

the projested tgts/lvls are speculative, do not take positions as they may be risky for you.

(refer ew chart and views posted on 06th dec 2009 http://valuetrading.blogspot.com/2009/12/my-gold-ew-chart.html)

these are not comex but london exch gold rates in $/oz, so some difference will be there. there is a small resistance near 1380.

from elliott wave point of view, at a glance looks like sub-wave ((v)) of (v) of iii of the 5th impulse wave from the low of year 2001 is going on. after which iv down and v up remain. iv can result in minor correction just near/below $1200/oz. v can go up to a tgt lvl 1452-62.

very long term tgts are about $1800-1850/oz after a good amount of correction below $1000/oz i.e after 5-v completes near 1450 etc.

on mcx my short to medium term tgt was about Rs 19250 and 20000/10gms, it made high about 20028and currently facing resistance on one of the trendlines from high of may 2009. if gold still rallies up and only when takes that lvl as well as the trendline out then can rally to roughly 22000. minor support currently is at 19250 and strong support for gold is at 17500.

mkt ahead...nifty 04th nov 2010

on monday, after the huge gap up opening and and maintaining the gains through the day it was suspected that perhaps nifty might again challenge the breakout level 6152, coming up after making a low of 5937 on last friday.

yday's gap up and breakout close has taken it further away from a possibility of movement to the prev expected 5800 lvl on downside. the trading volumes were not quite satisfactory. however there are imp resistances on dow near 11300 and on nifty slightly above 5200. so, if its just a bounce or fresh rally difficult to say at the moment.

there was also a falling wedge type pattern on nifty eod charts which was broken out from on monday. if correct then it has min lower tgt 6243 and min upper tgt of 6340, somewhere near the lifetime high. its a buy on dips for short term but the sl is quite deep from here.

we are still in the euphoria zone and till now no major surprises on earnings front, so only a slight increase upgrade on nifty eps can be seen, which has slightly lowered the rapidly rising valuations, but still in that overexpensive zone.

as we know that liquidity pumping in the euphoric situations can take the mkt to much higher levels than anticipated, so whenever the lifetime high of year 2008 is broken on large volumes, the long term tgts can be as high as 6700/7000 .i.e 10% higher.

mkt ahead...20th oct 2010...

much needed profit booking may have begun...more later...

evening update:

refer to the 20th sep 2010 technical outlook,"the upwardly sloping trend channel which the nifty was following for quite a while has a width of 660 points and the channel was broken on the upperside near 5600. so the tgt around 5600+660=6260."

accordingly, the nifty reached my above mentioned tgt 6260 and slightly more i.e 6284.10 and soon faced the profit booking and started its near term downtrend.


the nifty has closed below an imp 6050 lvl which was to be a tsl for short term positional long positions. therefore likelihood that in coming days there could be further fall with intermediate pullbacks/bounces.

it may also be good news that profit booking seems to be happening ahead of the big ipo's and oct being a caution month many times, which may give a good opportunity to the investors who were anxiously waiting on sidelines, if it slides further, to enter into buying stocks. seems that final intermediate to long term upward tgts may be much higher than the latest high if the result season also goes well. technically we can see some lvls but will not be appropriate to post now.

likelihood of an initial shallow correction upto 5800/5600(channel breakout lvl) cannot be ruled out. at any point the correction ends will be known and perhaps might be update here.

(read discl given above)

mkt ahead...nifty 26th sep 2010...

valuations:


nifty valuations certainly above the profit booking p/e zone of 23-24 as marked on earlier pe charts of mine, and becoming more and more expensive.

it is quite an interesting situation wherein nifty50 p/e valuations are high but when compared to year 2000 and also to period 2007-2008 on the price to book value basis, still the 4 p/b has not been crossed yet which infers the cheaper intrinsic value and fundamental strength of the stocks.

lot many stocks still underperforming. so the rally is not broad based, only the fundamentally better stocks have been rewarded with money inflows.

its certainly not a time for investors but as mentioned a good fast trading play, in which some stocks/nifty can rise abruptly and turn down at some point with the same speed.

difficult to give tgts for such upmoves but near to previous highs of 2008 one should exercise a lot of caution.

spot chart:


raise the trailing profit stop for short to medium term longs or medium term long positions now to 5880 closing basis.

mkt ahead...20thsep2010...

the upwardly sloping trend channel which the nifty was following for quite a while has a width of 660 points and the channel was broken on the upperside near 5600. so the tgt around 5600+660=6260.



hold the positional long positions with near term support 5750 closing basis.

mkt ahead...13th sep 2010...

and again 5350 held like a strong support which prevented any further fall to the 5200 lvl and nifty bounced off on short covering and overall mkt buying and we had a straight 16 day uptrend which was so good that infact the feared 5585 resistance on the previously respected uptrend channel was also convincingly taken out on the upside.

most likely the nifty may now follow the new drawn channel as shown in chart with resistance coming at 5712 plus in the short term, crossing which a near term tgt may be about 5780/5880 or so.

on the valuation front, we are already in expensive zone(5550-5730) on nifty50(refer 12th july 2010 post on this blog), anything above this is euphoric and prone to sudden large moves and may not be suitable for investors but good as a fast trading play.

the resis for the day is 5666/5676 and a rough sl for near term may be kept near 5600 on closing basis.

larger picture: nifty is still in firm uptrend so far and the intermediate to long term tgt is about 6000 to the previous high, and large profit booking in between cannot be ruled out on stretched valuations.

short to medium term investors cl sl is 5345 whereas intermediate to long term investors in stocks/nifty etf's etc dont have to worry much and can keep holding although they can also book profits partially anytime the sl for 5350 is convincingly broken consistently or whenever nifty reaches euphoria or touches the upper end of expensive valuation zones.

mkt ahead...19th aug 2010...

so the medium term trend remained strongly up holding 5350 tsl solid as a rock, as i had mentioned earlier these nifty positional longs were initiated in the zone 4900-4950. no change is tsl required as of now.

the tgt is raised from 5530 to 5578 which is a resistance on previously drawn channel and nearly achieved.

as the quarterly results have been mixed so far, no upgrades have happened on the nifty50 stocks index. therefore there is no change in our 5550-5730 expensive zone on p/e basis.

perhaps we are entering a risky zone above 5500 now the with first resistance coming at 5545.

with all these factors one can consider booking partial profits in the medium term positional longs when the nifty reaches the upper end of the channel. the profit booking if comes can easily take the nifty to 5350 and then to 5200 which can be maintained as sl on closing basis.

mkt ahead...23rd july 2010...

so as per view, the medium term uptrend continues after taking support near our tsl of 5200!

there was a -ve div on the eod charts indicating some sort of potential near to short term warning to the upward rally. but with yesterday's movement, it has come down a bit.

nifty has also done the much needed breakout above our 5400 lvl and taken out its two year high. it can therefore proceed to 5550(near to short term tgt) kind of lvls once the small resistance near 5467 is taken out.

by p/e analysis i had already mentioned that anything above 5500, nifty enters an expensive valuation zone of 5550-5730. and above 5750 etc it enters the euphoria zone.

but that itself is not a reason for a big sell-off in the mkt, but it would be a time for taking some profits off the table.



as shown on weekly chart, the nifty is moving in a rising trend channel with upper and lower limits currently placed at or above 5530(resistance) and 4872 or above(support) respectively.

the tsl (or more appropriately tpbl, let me coin the term here, tpbl!, the trailing/partial profit booking lvl) for the short to medium term positional traders can now be raised to 5350 from previously 5200 lvl and sl to 5200 from the previously about 5100 lvl. all as per eod closing basis.

i do hope the tgts, sl, tsl and overall mkt view for positional traders/investors is clear to the blog reader from the above paragraphs.

mkt ahead...12th july 2010...

nifty positional buy on dips advice was given in initial stages of the current upmove from 4800.

in the last post the tsl of 5200 given was also held perfectly for the positional short to medium term long positions! thereafter we have seen a further rally 5350 and more.

how much more?

once the april 2010 high of 5400 is taken out it can continue upto resistance from 5530 onwards as shown in chart above.

valuations can start getting expensive in the region i mentioned earlier on my nifty p/e charts .i.e., band between 23-24. on the current upgraded eps that comes to a range 5500-5730.

the caveat is valuations is not by itself a reason to completely sell/exit from positions and miss a leftover rally, say in any euphoric situations, which is not seen yet happening now.

US stock market valuations...

updt 05th july 2010:

an improved earnings estimate for next year can make the p/e valuations a bit attractive for next year.

one can also see the inverse relation between div yield and p/e ratio in above table.

technically the dow and nasdaq have broken down below their respective significant supports(9888/1040) of recent times. as such the outlook becomes bearish for medium term and it seems has potential to go down as much as 900-950 if 1000 lvl is also convincingly broken down in s&p500(us).

while a short to medium term bounce or pullback can occur anytime due to oversold lvls, but any such reversals from very recent lows is yet to appear on the charts. when such a pullback/relief rally does come, may be quite a significant one on the upside and might get sold into if 1145 is not decisively crossed and closed above.

pls go through my accurate analysis/view on dow jones and s&p500(us) in following links 16th march 2010 03rd may 2010 11th may 2010

mkt ahead...23rd june 2010...

there's no bearishness, however profit booking may continue for sometime.



as seen from spot nifty chart above, today's support is near 5300.

for positional short to medium term longs, the support(tsl) can be kept below 5200 and tentative sl can be about 5100.

because of the sharp run up in recent times, these lvls are a bit deep. but remember the advise on cutting shorts and going positional longs was given in comments section at 4950 after which time our downward tgt of 4800 etc was also achieved.

mkt ahead...16thjune2010...

5200 tgt for short to medium term traders done in style holding the recent lows!

nifty is moving nearly as per the tentative channel lines i had drawn in previous eod nifty spot chart, right now its touching the upper tline:


right now the near term upside is seen anywhere between 5250-5340 as seen from chart above where some resistances are placed. but with dow and the us mkts also moving up, there should not be much difficulty and dips toward the 4950 looks like a buy on dips kind of mkt for short to medium term. the 5300 plus lvls may not happen immediately.

there is another bullish brkout yday and its probable that perhaps the correction starting from 5400 might be over. some large profit booking can always come but if gets retricted to 4950-4980 region will be fine(and not more than 4700 in medium term).