market analysis...

the current big support for nifty on the p/e chart is 3500 about 15 times current eps where it should bounce in near term(although roughly 3250-3550 i prefer acc to ew etc), below that in long term will probably go to 2700 etc acc to p/e chart, pls note these are not tgt lvls but support lvls if nifty goes down there(pls refer to charts previously posted on this blog). p/b currently also not near to the lvls where normally market bounces off but is trending down means there was currently no case for great amount of bullishness(the price/macd chart posted many days ago had warned about the downmove from 4650 to 3800 much earlier).

i have been using p/e charts with good amount of success since this blog started, infact the 6400 top( perhaps i had posted a thread/post reg this on vfm/my blog before jan 2008) acc to peak p/e was predicted(nifty topped at 6357!), p/e expansion/contraction also worked well on charts and all these can be used for investment deci i guess alongwith ew and tradional ta.

after 5 years of bull run, a period upto 2 years of sideways/down mkt is but natural, when the bear mkt is over(is not in a hurry to do so presently and for good it should not) we'll know for sure from ta and start investing again till then trading(in nifty in small lots only intra etc) to be done if ppl must, else may sit on sidelines and enter only when correction gets over for great value buying(picking the exact bottom will be a difficult task).


going up or down.

ew view:

this is the grey area/million dollar question, are we going up(i.e fresh upmove) or down(correction resuming) from here. so far nothing has changed in my earlier view that i was holding about 3500 or more etc.

view 1) is C over at 3799. so if all 5 downwaves of C are over then, either an x up followed by correction(will be difficult to anlyse this situation) or a fresh upmove which will have uptrend after ret upto 4110-3990. so if this is correct not much downside will be left below 4000.

view 2) C-1 to C-4 are over and C-5 begins: though at glance it looks like that but structurally all conditions for this are not satisfied.

view 3) first downwave(which was large) of C i.e C-3-(1) over at 3799(iam biased toward this for reasons like p/e etc explained earlier here).

acc to this, 4268 the 0.618 ret of 4558-3779(wave C-3-(2)) and slightly more which is normal and expected and within acceptable limit, is over and probably C-3-(3)-i started down from there. so after this a small bounce will be there and it will again slide fast after that below 3990 and 3790 etc. the max lvl on upside for C-3-(2) earlier was 4268-4377, any bounce should not exceed this range i feel for this view to be correct.

if this view is correct then C-3-(1) was very large and final tgt will also be deep i would settle for 3250-3550(exact target not calculated). a break of 3790 on closing basis is needed for confirmation of C-3-(3) running.

so from above, it looks like the lvls 3790 and 3990 become kind of deciding factor for further moves.

the final target whatever and whenever it comes doesn't matter much to a long term investor since even now valuations are attractive, but whenever that happens and mkt bottoms out finally and starts fresh upmove should not be missed as an investment opportunity.

the charts will indicate this.