PRE-OPEN MARKET OUTLOOK(27-07-2009)

LONG TERM AND SHORT TERM TRENDS WERE UP AND AFTER NIFTY SUSTAINING ABOVE 4480 ON LAST FRIDAY INTERMEDIATE TERM TREND HAS ALSO TURNED UP. AS PER DOW THEORY INTERMEDIATE tERM TREND LASTS FROM 3 WEEKS TO 3 MONTHS AND LONG TERM TREND LASTS FROM 1 YEAR TO NUMBER OF YEARS. INDIAN MARKETS SUSTAINED AND MOVED ABOVE 200 DMA IN THE LAST WEEK OF APRIL 2009 AND NOW HAS ALSO TURNED UPWARD AFTER COMPLETION OF INTERMEDIATE TERM CORRECTION(2ND WAVE).IT SEEMS THAT 3RD WAVE(2ND IMPULSIVE) HAS BEEN STARTED WITH THE COMPLETION OF 2ND WAVE(1ST CORRECTIVE WAVE) AND AFTER SUSTAINING ABOVE 4693 UPMOVE TOWARDS THE MINIMUM PROBABLE TARGET OF 6359 WILL CONFIRM. FOLLOWING EOD CHART IS CLEARLY SHOWING FORMATIONS:-
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3RD WAVE(2ND IMPULSIVE) CALCULATIONS ARE AS FOLLOWS:-
1- 6 YEARS RALLY STARTED IN 2001 AFTER WORLD TRADE CENTRE ATTACK AND NIFTY WAS BELOW 1000.
2- THIS RALLY CATCH REAL MOMENTUM AFTER THE END OF IRAQ WAR IN APRIL 2004 AND THIS TIME ALSO NIFTY WAS BELOW 1000.
3- THIS RALLY TERMINATED IN 1ST HALF OF 2008 AT 6357.
4- THIS 6 YEARS RALLY CORRECTED IN 5 WAVES AND COMPLETED AT 2253 ON 27TH OCT. 2008.
5- MARKET CONSOLIDATED 5 MONTHS AND AFTER THAT CATCH MOMENTUM IN MARCH 2009. AS LOWEST OF ON GOING RALLY IS 2253 THEREFORE ALL THE CALCULATION WILL BE DONE FROM IT.

6- 1ST WAVE(1ST IMPULSIVE) STARTED FROM 2253 WHICH COMPLETED AT 4693 WITH THE GAIN OF 2440 POINTS.

7- 2ND WAVE(1ST CORRECTIVE) STARTED FROM 4693 WHICH COMPLETED AT 3919.

8- 3RD WAVE(2ND IMPULSIVE) STARTED FROM 3919 AND AS PER ELLIOT WAVE THEORY 3RD WAVE SHOULD NEVER BE SHORTER THAN BOTH 1ST WAVE AND 5TH WAVE. IT CLEARLY MEANS THAT 3RD WAVE WILL GAIN MINIMUM THOSE POINTS WHICH WAS GAINED BY 1ST WAVE.

9- AS 1ST WAVE GAINED 2440 POINTS THEREFORE 3RD WAVE WILL ALSO GAIN MINIMUM 2440 POINTS AND PROBABLE TARGET OF 3RD WAVE(2ND IMPULSIVE) WILL BE AS FOLLOWS:-

3919(3RD WAVE STARTING POINT)+2440=6359.

10- PREVIOUS ALL TIME HIGH IS AT 6357 AND AS PER THIS CALCULATION PROBABLE TARGET OF 3RD WAVE IS 6359 THEREFORE IT IS CLEAR THAT INDIAN MARKETS MAY TEST ALL TIME HIGH IN THIS RALLY.

MARKET CONSOLIDATED ON LAST FRIDAY, IT IS EXPECTED THAT CONSOLIDATION AND SLOW UPMOVE WITHIN RESISTANCE RANGE(4525-4693) WILL BE SEEN IN THE COMING SESSIONS. MARKETS MAY MOVE INTO LITTLE NEGATIVE ZONE OR CLOSE IN SMALL RED ALSO DURING CONSOLIDATIONS BUT THAT WILL NOT MEAN TREND REVERSAL BECAUSE FOR ANY TYPE OF DOWN MOVES GOOD SELLING REQUIRES AT THIS MOMENT AND I AM NOT EXPECTING DOWN MOVES.

AS GLOBAL CUES ARE POSITIVE THEREFORE SLOW UPMOVES WILL BE SEEN AFTER GREEN OPENING AND VOLATILE TRADING TODAY. GREEN OPENING AND GREEN CLOSING IS EXPECTED TODAY.

(LALIT KUMAR DHINGRA)