mkt ahead...11th may 2010...

it was an unbelievable bounce in the nifty yday(although nothing in comparison to the european stock mkts) on the back of huge european union bail out package.

even dow has risen and nearly wiped out its huge fall it made a couple of days ago. everything looks so good? the question being asked is, is it time to buy and whether the bearishness of the fall has ended. but the damage on daily charts is already done.

i say its still a pullback for traders and not exactly buying opportunity for short to medium term investors. but the medium term support on dow(i.e 9800) is very well held, investors with given time frame can buy on declines only if that lvl is held on sustainable basis after some time when process of bottom formation or any indication of established uptrend is seen.

one thing to note, why i said its just a bounce/pullback rally. the bar made on 6th of may is from high of 10926 to low of 9780, so the last two days movement is still confined within this bar, and no breakout has occurred in any direction.

secondly the daily macd is bearish, so some large players might use the rally to exit, till or unless any crossover takes place.

on nifty also the picture is that of a pullback rally from the recent lows.

the first of the falling trendlines on daily charts is also now encountered so it may see resistance in this 5200-5230 kind of lvls going forward. even if it takes these resistances out there is less than 100 points upside potential.

hence one can use the current lvls for booking profits in longs in stocks/nifty. the daily charts medium term trend is down with a bearish macd. till the trend turns positive, one can stay out from short to medium term buying.

nifty movement as per ew analysis'...

some possible wave counts for the ongoing nifty correction from the peak of 5399.65.

Case I:



though getting into an oversold territory, the nifty may immediatly have a downside till about 4950, which coincides with the 200 dsma of nifty.

then a small bounce/pullback may occur in the near term upto 5123 or so, which coincides with 100 dsma.

thereafter, it will have to be seen whether this would be sustainable or not. if not, and c of C breaks on downside, then the downside can continue upto wave C-e which can take it to about 4800 or slightly below that lvl.

Case II:



after C-c a small pullback just above/near 5100 and then short term bottom formation near 4950.


when Case I or Case II is complete(i.e C complete), then a recovery in mkt for short(to medium) term may happen, which can be bought into for short to medium term.

right now the medium or medium to intermediate term picture is still okay on nifty and the us mkts.

-abhay r somkuwar.