Technicals for the Week

The markets lost another 2 pc during the week to close at 4748. The picture is looking gloomy all round. What does the market bring for us the next week?

1. Anna Hazare fast is over and Ben Bernanke Jackson Hole meeting did not bring any nasty surprises. Expect some bounce next week.

2. The Elliot wave analysis states that we are in last down move of the 3rd wave down.
C wave so far.

Wave 1 - 5944 - 5196 = 748 points
Wave 2 - 5196 - 5741 = 545 points
Wave 3 - 5741 - 4796 = 945 points and ongoing
Wave 3 can be sub - divided into 5 waves
Wave 1 from 5744 - 5454 = 190 points
Wave 2 = 5454 - 5552 = 98 points
Wave 3 = 5552 - 4946 = 606 points
Wave 4 = 4946 - 5198 = 252 points
Wave 5 5198 - 4720 = 478 points and going on

Wave 3 has traversed a distance of 1024 points.If it extends to 138.2 pc of wave 1, target would be 4707.
If it extends to 161.8 pc then the target would be 4530 which is also near to the November 2009 bottom of 4538.

3. A bounce from these levels would last for 3-4 weeks and can go up to 5110, 5230 and 5350. Only a close above 5550 would signal a fresh bull run.

4. All bounces should be used to go short, Longs only above 4900 for short term trading.

5. The Weekly RSI is at a critical support area over the last 20 years. So, a bounce is due.

6. Trend line shows above 4867, the downward trend of this fall gets broken.

7. The 5 week low ema comes at 4959, a close above this shows end to the down move.

8. RBI may hike rates just 1 last time on September 16th. The next week is a truncated one and expect muted trading.

9. The Channel resistances come at 4881, 5038 and 5296.

Now, is the time to start preparing a shopping list and beginning to buy.