INFLEXION LEVEL Q109

We have been waiting for this set up since OCT 2008 low. It was easy to look for a bounce from 27 OCT market low. There was historical volatilities, extreme momentum and global panic. Though choppy, we got the anticipated bounce. And what a bounce it was, gapping, sideways and slow. Prices have almost lost two months of trading action, stressing brokers and testing market patience. And now we barely reached 5 NOV highs and the market structure started looking weak again. Along with the bounce, we anticipated this choppy action too, when we wrote ‘Weak A, Phony B, Missing 1’. Now that the phony B is behind us and C up has started to crack, we would like to review the overall market structure.
Every fractal structure can be labeled as A-B-C or 1-2-3. It’s only after three legs are complete that we understand whether the move is a trend or a counter trend. When after the third leg i.e. a C or 3, markets begin a new impulse in the opposite direction (a clear five), we can clearly say that the previous three legs were A-B-C and not 1-2-3. On the other hand if after the third leg (C or 3), markets start to get choppy and fail to move in the opposite direction, despite negative news, we can assume an ongoing 4 wave structure, with a final 5 still pending.
We are at the same inflexion now. Sensex and NIFTY don’t have much space lower to move. If we are indeed in a coiling 4 and not a real reversal, markets should turn up now. SENSEX and NIFTY should continue to hold above 9500-9600 and 2920-2930 respectively. A move down from here would dash all OCT low hopes for a sustained move and we will brace up for a retest of OCT lows and possibly continued negativity in first quarter. This seems to be a low probability scenario for us at this stage. We think markets are in a potential 4 wave, which should find buying interest with every marginal dip.
NIFTY gaps, mid channel intermediate supports, weak sectors like CNXIT still above OCT lows and sideways structure on BSEOIL and BSEBANK validate our preferred view. Whether our preferred view is correct and we are in a 4 wave, should be clear tomorrow or a day after Christmas. We are expecting Santa to get a rally. These are tough times to expect too much, but we will pray.
Enjoy the latest WAVES.INDIA
Merry Christmas
ORPHEUS INDIA RESEARCH
WAVES.IND. is a perspective product published on Monday and Wednesday. The report highlights Indian Stock Market top sectoral Indices and Sensex (BSE 30) viz. BSEOIL, BSESC (Small Cap), BSEMC (Mid Cap), BSEHC (BSE Health Care), BSEPHARMA (Pharmaceuticals), BSECG (Capital Goods), BSEBANK (Banking), CNXIT (Technology), BSEFMCG (FMCG), BSEAUTO (Auto) etc.. The product also covers all the 30 Sensex components. The product highlights Primary (Multi Month) and Intermediate (Multi Week) price trends. The report illustrates key price levels, price targets, price projections and time turn windows. The product uses Elliott waves, traditional technical analysis tools, sentiment indicators and other alternative research tools like INTERMARKET to spot outperformers.
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