MIRAGE VERSION 2.1 ON 20/03/10 BY DR. SPANDAN JOSHI
This week, I went back to my original count that suggested a possibility of a C5-5 failure at 8047 when sensex rose from downward wedge.
From that point I changed my view to more bearish, i.e. considered as continued correction rather than counting subsequent waves as a part of fresh Bull Run waves. If I go back to my very original count (i.e. C5-5 failure and hence a new Bull wave structure), I shall make a fresh attempt to count as per original count as follows.
Diagram 1 shows Original count of C5 failure as per C5-5 failure followed by a new Bull Run. Diagram also shows probable wave count.
- Wave 1 from 8047 to 15600 and that is an upmove of 7553 points
- Wave 2 from 15600 to 13219 and that is a down fall of 2381 points
- Wave 2 was 31% of wave 1 which was close to Fibonacci ratio of 30%
- Wave 3 from 13219 to 17790 and that is of 4571 points
- Wave 3 was 61% of wave 1 and is close to Fibonacci ratio of 61.8%
- Wave 4 from 17790 to 15652 and that is a down fall of 2138 points.
- Wave 4 was of 47% of wave 3 and that is close to Fibonacci ratio of 50%.
- Wave 5 has taken us to 17580 so far and is still in progress
- This could be the most bullish count I have ever made.
- Wave 5 has to be smaller than wave 3 as wave 3 can't be smallest of 1, 3 and 5.
- Hence wave 5 can be maximum 62% of wave 1 or 50% in a bearish case. 62% of wave 1 means it can take us to 18440 and 50% means it can take us to 17937.
- Overall 18100 come as per 76.4% of upmove of the entire fall from 21206 to 8047 which was a fall of 13159 points. (76.4% of that 13159 comes to 10,053)
Diagram 2 shows sub waves of 5th Wave. We may currently be on 5-5-3. If 5th wave has to be failed, we shall see 5-4 as a down move followed by further downfall, instead of
5-5. going up as a last up move. This is anticipation that my previous wave count didn't count 5th wave well.
Elliott Wave Analysis
1 We may be on 5th Wave of the Bull Run's 1st wave. That should end within a month or so.
2 We may see a small downfall towards 17200/17100 to 16500 and a final spurt towards 17940 to 18500.
3 Once 5th wave of the first Bull Run gets completed, we may see a down move towards 14.5 to 12K as per 2nd wave. However we can only give precise targets once we see 5th wave completed.
4 I feel 5th wave may take a month or two and hence we may see a top between 20th April to 20th June 2010. Markets may correct in the second half of 2010 and continue to correct till the start of a new year. (Corrective Time forecasted as between April/May 2010 to January/March 2011)
Diagram 3 shows Volume divergences with negative RSI divergences since September/October 2009. However RSI shows daily readings. Monthly RSI has just touched the trend line yesterday. If there has to be a reversal, it has to be imminent; else RSI will break the trend line (Weekly and daily) upwards.
Overall Analysis
Elliott wave Based Analysis
1 We may be on 5th Wave of the Bull Run's 1st wave. That should end within a month or so.
2 We may see a small downfall towards 17200/17100 to 16500 and a final spurt towards 17940 to 18500.
3 Once 5th wave of the first Bull Run gets completed, we may see a down move towards 14.5 to 12K as per 2nd wave. However we can only give precise targets once we see 5th wave completed.
4 I feel 5th wave may take a month or two and hence we may see a top between 20th April to 20th June 2010. Markets may correct in the second half of 2010 and continue to correct till the start of a new year. (Corrective Time forecasted as between April/May 2010 to January/March 2011)
PE Ratio Based analysis
PE is currently 22. PE based analysis shows; it may take one full year after it makes a top, which was in October 2009. Time comes to October 2010 for it to correct to a range between 16.5 to 12.5.
Ted Spread Based Analysis
1 Ted Spread in immediate future can move north and equities may take a direct hit. In odd cases, if it goes down then there can be a last down move in Ted spread but it looks like it can not move south for a very long time as it has made numerous bottoms already.
2 A rise of Ted spread to 23/25 will give markets a knee jerk reaction. Ted spread over 50 means tough times ahead for markets. I put 3 to 4 months before it makes a final bottom and rise decisively as per my Elliott's count on Ted Spread chart. That brings June/July 2010 in play.
Vix Based Analysis
Vix chart shows early signs of Vix shooting up after making several bottoms recently. We have shown from the above chart that whenever Vix goes up to 40, market usually goes south. However current Vix is too low at 17 and will take a long time to reach 23/25 level, followed by 40 to upset markets. I put 6 months for it to reach between 25 and 40 and that time brings us to August/September 2010.
Inflation Based Analysis
1 Once you make a very high base of Inflation, the very next year it makes a very low base and that is correlated by a great rally in equity.
However once a very low base is created like back in 2002 and 2009, inflation spikes 8/12/16 months then after and goes very high. That is correlated with a fall in equity markets. Such high and low base formations continue for 2.5 to 3.5 years till it settles somewhere in the middle and that allows equity to run smoothly , which then makes new highs as long as inflation remains in a normal channel.
2 Indian inflation started to rise in October/November 2007 and made a peak in October 2008 Markets witnessed a terrible fall during this entire time. . (It seems that there is a 4/5 months of time for a switch over, somehow) However market rallied then after and went up to 17K when inflation became negative in June/July 2009. . (It seems that there is a 4/5 months of time for a switch over, somehow) The markets will witness a very high inflation 12 months after it made a low base and that time comes during June/July 2010. A time frame between May to September 2009 was associated with a very low inflation and market rallied to take full advantage from 10K to 17K. Similarly a time frame between May 2010 to September 2010 can see a very high inflation and if the relationship quoted above is true, we may see a sharp fall in Indian equity markets during the same time.
Overall Analysis taking all parameters listed above
- A new Bull Run's 1st wave is about to end.
- Upmove to 18500. A top is expected between March to June 2010.
- Upmove between 17900 to 18500
- Downfall in between is likely to 17100/16900
- A major fall looming then after reaching the top.
- A time period between April and October 2010 can be critically important for the fall.
- A bottom can be made late this year in October/November 2010 or January/march 2011.
- A fall can be of a much lesser magnitude then October 2008 fall as all parameters listed above are at historical low levels and can not upset markets to a great deal.
- After some serious consolidation then after, we may see Indian BSE sensex hitting 24 to 29 K first followed by 38/39K within 3 to 5 years. A very sharp upmove in the middle of 2011 will take markets to one of the above targets.
Wish you have a good luck.
Best Regards
Spandan Joshi
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actual mail contains more analysis which contains ted spread and ted spread analysis,dollar index analysis,vix analysis,inflation analysis with no of charts.
any one interested can send their email id, i will forward them.being a word file containing charts ,it is difficult to put it on blog.
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I WILL LIKE TO PUT A LINK OF MY OLD MAIL
http://pankaj564.blogspot.com/2010/02/query-to-elliot-wave-experts.html
