Saturday, April 20, 2013

Weekly Update: Medium Term Outlook




  1. CNX Nifty opened lower this week at 5508.5 (5550.5) made a higher high of 5794.35 (5610.65) , and made a higher low of 5500.3 (5477.2). It closed higher at 5783.1 (5528.55) for the week.
  2. The RSI(14) jumped to 52 from 41, notably it had been taking support around 40 for many months, and so it did it again. Remember it had crossed over to 70 level in the last week of Dec 2012, first time since Dec 2010. Fast MACD had slipped below center line and continues below it's signal line.Momentum indicators continue to indicate weakness, but are coming off from oversold levels. The ADX reading for the week is 19.76, coming off from all time low of 9.48 registered for the week ending 7th Sept 2012.
  3. The Adjusted Volumes for this week were above average. The OBV is in downtrend. The CMF continues below center-line around -0.1.
  4. The Pars Fortunae for this week lies in 9 degrees Capricorn. This point is Semi Sextile with Neptune. The second house from POF is Aquarius, and it has Neptune transiting through it. Jupiter is in the 5th House which falls in Taurus and Rahu and Saturn in the 10th house which falls in Libra. The Point of Speculation is exactly 120°. The Ascendent is conjunct with Jupiter, in Taurus in Rashi Chart (D-1), and in Cancer in the Navamsa Chart (D-9). The lord of the first house is Venus which is trine with Moon in Leo. In Navamsa Chart (D-9), Venus is in Leo (Second House) and Moon is in Libra, causing Shubh Argala to the Ascendent.* The Moon is in P. Phalguni Nakshatra (27 Nakshatra Vedic System) whose lord is Venus. The 10th house is in Aquarius, with Neptune transiting through it.The Sun, Venus, Mars, are conjunct with each other. Moon is trine with Venus and Pluto. The Planetary periods are Ven-Jup-Jup-Mon as per Vimshottari System. The Chaturthamsa Chart (D-4) has ascendent in Scorpio with it's lord exalted in Aries. The lord of the second house (Sagittarius) is Jupiter which is conjunct with Ascendent. Astrologically coming week carries forward the strength gained on 10th April 2013, and probably reaches the zenith this coming week on the 25th when we have a partial Lunar Eclipse at 10Li34 which would be exactly trine with Neptune at 10Aq51 -- 25th April 2013 is also the expiry day!
  5. It's pointless to talk about resistances in a rising market, but Nifty is likely to meet some definite resistance around 5865. On the other hand it could again be a good point for counter-trend maneuvers. Say, going long in 5800 PE above 5850 odd levels for target of double value. It would be rangebound between 5575 and 5795, while it would be overbought above 5865. Any profit booking could push Nifty to 5686, although 5749 could act as good support.


Friday, April 19, 2013

Diametrics Mystified:Was it really-really a diametric?

Here "I" means Glenn Neely and not me! My own comments would follow later..
What is a NEoWave NEUTRAL Triangle?
Answer:
Under orthodox Elliott Wave, there are two patterns that contain five segments - Impulsions and Triangles. Elliott Wave breaks impulsive patterns into three categories (where either the 1st, 3rd or 5th leg of the pattern is much longer than the other two), but only breaks Triangles into two categories (contractions [where the 1st segment, wave-a, is the longest] and expansions [where the 5th segment, wave-e, is the longest]). It was logical to assume Elliott`s Triangle categories had a "missing link." In the mid 1990`s, I started seeing five-legged corrections where the middle leg [wave-c] was the longest, thereby filling in the "missing link" in the Triangle category. Lacking a specific name for this category, I decided "Neutral" was the best compromise between expansion and contraction. Just as Contracting Triangles are similar to Impulsive patterns with a 1st wave extension and Expanding Triangles are similar to 5th wave extensions, a Neutral Triangle is similar to a 3rd wave extension. Therefore, a Neutral Triangle is a five-legged formation in which the middle leg (wave-c) is the longest and waves-a & e tend toward equality. The channeling of a NEoWave Neutral Triangle is similar to a 3rd wave extension; you usually employ parallel trend lines drawn across the end of waves-b & d and another line drawn parallel to the b-d line starting at the top of wave-a. Behavior following a NEoWave Neutral Triangle is not as violent as that seen after a Contracting Triangle, but is more "trendy" than what occurs after an Expanding Triangle.
What is a NEoWave Diametric Formation?
Answer:
I discovered this wave pattern around 1992 - two years after Mastering Elliott Wave was published. As a result, it is not mentioned in the book. A NEoWave Diametric is a 7-legged formation (Triangles are 5 legs, Flats and Zigzags are 3) that does NOT involve an x-wave. As a result, instead of a-b-c - X - a-b-c, I had to continue with the alphabet, labeling it a-b-c-d-e-f-g. The distinguishing factor of a Diametric is the similarity of each wave segment in time and complexity to the other six. In Flats and Zigzags, time and complexity differences are extreme between waves-a, b and c. In Triangles less so, in Diametrics time similarity (not time differences) is the norm. Diametrics occur in two main categories. One in which a period of expansion is evident during waves-a, b, c and d, followed by a period of contraction for waves-e, f and g. The other is the reverse; contraction occurs first during the first four wave segments, followed by expansion for the remaining three. This creates the look of a bowtie for the first series and a diamond shape for the second.
What is a NEoWave SYMMETRICAL formation?
Answer:
A Symmetrical is a new pattern that exists under NEoWave Theory (i.e., it was not one of the patterns included in R.N. Elliott`s Wave principle). I discovered my first Symmetrical formation around 2001 – many years after I wrote Mastering Elliott Wave. As a result, Symmetricals are NOT mentioned in my book. A Symmetrical is a 9-legged formation (Flats and Zigzags are 3, Triangle are 5, NEoWave Diametrics are 7) that does NOT involve an x-wave. Very specifc rules must be met for the application of an x-wave. If an x-wave cannot be used to connect a-b-c and a-b-c-d-e patterns, then the ONLY way to label such a formation is to continue through the alphabet to waves-f-g-h and i. NEoWave Diametrics end with wave-g, whereas NEoWave Symmetricals end with wave-i. The distinguishing factor of a NEoWave Symmetrical formation is that it is the ONLY wave formation that allows price, time and complexity similarity of every wave segment. In Flats and Zigzags, time and complexity differences must be very obvious between waves-a, b and c. In Triangles, the differences begin to reduce, but are still quite pronounced. In NEoWave Diametrics, the time and complexity exhibited by each wave will be very similar, but they remain different in price. In a NEoWave Symmetrical, most waves possess the same time, price coverage and complexity. Such similarity is NOT allowed in any other wave formation. In general, Symmetricals tend to unfold between parallel lines, but there might also be some expansion or contraction present throughout the pattern.
Is there a rule that can be used to determine if a move is an A,B,C or the 1,2,3 of an ongoing impulsion?
Answer:
Orthodox Elliott Wave analysts have NO rules to differentiate between a concluding A, B, C zigzag or a still-forming 1,2,3,4,5 impulsion. Fortunately, if you employ advanced NEoWave concepts, there IS a way to decide whether a zigzag (or Triangle) is ending or an impulsion is continuing to form. It is my discovery that 3-legged corrections exhibit very different TIME relationships than impulsions. Under NEoWave, the fewer legs a pattern contains, the greater the time difference allowed between each segment. As a result, flats and zigzags (compared to all other patterns) exhibit the most significant differences in time between waves-A, B and C. Therefore, if in your developing pattern you measure the time consumed by the first two segments (A and B or 1 and 2), and:
  • you find the first takes more time than the second, a Triangle (not a Zizgag) is forming.
  • If the second takes between 100% and 261.8% of the time of the first, a Zigzag or Impulsion is possible.
  • If the second takes more than 300% of the first, a Zigzag is forming.
What are the minimum requirements for wave-C following a running B-wave correction?   Answer:
If wave-C is part of a Flat or Zigzag, wave-C should be at least 161.% of the price of wave-b of the running correction (i.e., wave-b of wave-B), but will almost always be 161.8% of the price of wave-A. Pattern implications do not necessarily carry through from one wave to the next in Triangles, so if wave-C is part of a Triangle (any version), the "power" implied by the running B-wave correction may not be represented by wave-C. In that case, wave-C should still be at least 161.8% of the price of wave-b of wave-B. NEoWave TIMING concepts will apply to the time consumed by wave-C, which is based on how much time wave-B took in relation to wave-A.
Can a Terminal impulse end with a 5th wave failure?
Answer:
Posed by Jacek Filutowski (location withheld), this question addresses a NEoWave pattern discovery I made more than 10 years ago. The pattern is called a 3rd Extension Terminal, which can easily (and usually does) end with a 5th wave failure. In Trending impulsions, the only time wave-5 can fail is when wave-3 is the extended wave and wave-4 retraces 61.8% (or more) of wave-3 and wave-4 is larger than wave-2 in price. What makes Terminal impulsions different is each segment is corrective in design, plus waves-2 & 4 can retrace much more of the prior wave than is allowed in Trending impulsions. But, the same rules apply as it relates to the above question. To see wave-5 of a Terminal fail, wave-3 must be the longest leg, wave-4 must retrace at least 61.8% of wave-3 and wave-4 must be larger than wave-2.
Can a 5th wave be a Diametric formation?  
Answer:
Sent in by Rajkumaar Perumal of Chennai, India, the answer to this week’s question can be found by focusing on the internal design of an impulse pattern. A standard (trending) impulsion’s internal structure is :5 :3 :5 :3 :5, whereas a terminal impulse is a :3 :3 :3 :3 :3 affair. Since a Diametric formation always compacts to a :3 (ie, a correction), the ONLY time a Diametric can occur as the 5th wave of an impulsion is when that impulsion is Terminal in design.
Is a Diametric formation Corrective or Impulsive? Also, in a rising market, does it indicate the trend will continue or does it indicate the rally is over?  
Answer:
This question was sent in by Rajan Khosla (location unknown). Since my recent customer survey indicated many were confused about my NEoWave formation discoveries (Diametrics and Symmetricals, which are not discussed in Mastering Elliott Wave), I thought additional focus on this subject was necessary. Let's first address part one of your question. All patterns. other than 5 segment Trending or Terminal impulsions, are corrective in nature (i.e., they compact to a :3). As a result, Diametrics are definitely corrective formations. Now on to question two; a Diametric cannot occur as waves-1, 3 or 5 in a Trending impulsion, nor in wave-c of a Flat or Zigzag, but they can occur virtually anywhere else. As a result, no blanket statement can be made about a Diametrics future implications. It depends on what wave it concludes of the next larger degree and the implications of that conclusion within the context of the larger pattern. For example, if the Diametric concluded wave-e of a Contracting Triangle, the implications would be very different than if it concluded wave-d of the same Contracting Triangle.
How do you differentiate between the end of a Contracting Triangle and an ongoing Diametric or Symmetrical?  
Answer:
This question is the composite of several questions I have received the last few months. The time and price consumption of the waves during the contraction is the key. If wave-c is more than 61.8% of wave-a and wave-e is more than 61.8% of wave-c, that is a big clue. If the time and complexity of all the waves is more similar than different, a Triangle is very unlikely. Also, following the e-wave of a Triangle, the market should start moving as fast (if not faster) than the violent move during wave-a. If the market proceeds in a fashion similar to that seen during the other waves, then a Diametric or Symmetrical is a certainty.
In a NEoWave Diametric, what would be the maximum Time deviation between adjacent waves?  
Answer:
In a NEoWave Diametric, the general rule is most wave segments tend toward equality in time, but are different in price. For time similarity to be most obvious, the complexity of the Diametric should not exceed 55 monowaves. If it does, best to move to one higher time frame (i.e., one which is 5 times larger than the chart you are currently looking at - for example, if the Diametric is visible on a Daily chart, but contains more than 55 monowaves, move to a Weekly chart and reassess the Diametric on that time frame). If the entire Diametric is less than 56 monowaves, then the time variation between each leg of the Diametric will usually be less than 1.618% of the time of an adjacent wave but more than 61.8% of the time of an adjacent wave. Keep in mind, there is usually one exception to this rule in each Diametric where one segment is more than 161.8% (or less than 61.8%) of the time of an adjacent wave.
When you have a diametric formation, and wave "G" has finished, what can be expected afterward (price and time)?  
Answer:
This is a "high level" question, so if you are not serious about wave theory, don't continue. The post-pattern action following a Diametric is not dependent on the Diametric itself (as with most other wave formations), but relies on the larger pattern the Diametric concludes. For example, did the Diametric end wave-A of a larger Flat or Triangle; was it wave-2, wave-4, wave-x, etc. In order of priority, these are the things you can expect following wave-G of a Diametric. The wave right after wave-G will be larger and faster than any "same direction" leg that occurred during wave-G. Next, if that post-G-wave is also larger and faster than waves-B, D and F within the Diametric, then the Diametric ends a single leg of a larger formation. If the move after wave-G is not larger and faster than waves-B, D and F, then an X-wave is probably forming. Otherwise, the Diametric will be one leg of a larger, ongoing pattern OR it will be wave-1 or 3 of a Terminal formation.
Sometimes b-waves are larger than a-waves, sometimes they are the same size and sometimes they are smaller than a-waves. Does it mean anything?
Answer:
Under NEoWave, in any Flat or Zigzag, the size of wave-b provides crucial information regarding the size of the future trend. In Flats, the larger wave-b, the larger the post-Flat trend; the smaller wave-b, the smaller the post-Flat trend. If wave-b of a Flat is larger than wave-a, the post-Flat trend will be at least equal to the pre-Flat trend and frequently 161.8% or more. In Zigzags, the closer wave-b is to 61.8% of wave-a, the greater the chances wave-c will be smaller than wave-a. The smaller wave-b is in a Zigzag, the greater the chances wave-c will be 161.8% of wave-a.
Since Mastering Elliott Wave, have you developed new ways of applying TIME to categorize corrections?
Answer:
In Mastering Elliott Wave (MEW) I cover general TIME relationships as they apply to impulsions and corrections, but a more sophisticated perspective has emerged since I wrote MEW nearly 20 years ago. Below is a description of how TIME behaves in Flats, Zigzags, Triangles, Diametrics, Symmetricals and Impulsions. FLATS and ZIGZAGS (3 segment patterns)
1. The time differences between waves in Flats and Zigzags is greater than in any other correction. 2. If waves-a and b are about equal in time, wave-c will usually equal a+b in time. 3. If wave-b is much larger than wave-a in time, wave-c will equal the time of (a+b)/2. 4. Wave-b can NEVER take less time than wave-a in a Flat or Zigzag. 5. Based on the above, this means wave-c always takes more time than wave-a in Flats and Zigzags. 6. Over all other corrections, Zigzags allow for the greatest price differences between waves.
TRIANGLES (5 segment patterns)
1. Time differences between waves in a Triangle continue to be measurable, but are less obvious than what is seen in Flats and Zigzags. 2. If waves-a and b are about equal in time, wave-c will equal a+b in time. 3. If wave-b is much larger than wave-a in time, wave-c will equal the time of (a+b)/2. 4. Wave-b is allowed to take less time than wave-a IF it is smaller than wave-a in price. If it does, it almost always means the Triangle will possess what I call NEoWave Reverse Alternation (read about this in the Question of the Week section by doing a search for "Reverse Alternation"). 5. Based on the above, this means wave-c always takes more time than wave-a in Flats and Zigzags.
DIAMETRICS (7 segment patterns)
1. These patterns began to appear in the early 90's as the market's way to adjust to the increasing popularity of wave theory (too many people were looking for the same things, so the market created new ways of behaving). 2. They were the first patterns I witnessed where most wave segments took about the same amount of time, with one or two of the waves consuming a little more (or little less) time than the others. 3. While most waves consume a similar amount of time, they do NOT consume a similar amount of price. A Diametric will possess an obvious expansionary or contractionary bias during the first four waves of the pattern; that bias will reverse during the second half of the formation.
SYMMETRICALS (9 segment patterns)
1. This pattern emerged around 2001 as the S&P went through its transition from a bull to bear market for the first time in more than a decade. 2. Their unique characteristic is that most of their waves consume about the same amount of time and price. Two of the waves may consume a little more (or a little less) time than the others and two of the waves (possibly the same two) will consume a little more (or a little less) price than the others. 3. Of all patterns, Symmetricals all for the least price and time differences between waves.
What we can derive from the above list, which is a NEoWave discovery, is that 3-segment corrections allow for the greatest time differences. As you move through 5, 7 and 9 segment formations, the allowed price and time differences continue to diminish with Symmetricals allowing for the least price and time differences between waves.
Since Triangles occur frequently, but are often misinterpreted, what clues exist (early on) to tell us a Triangle is, or is not, forming?
Answer:
Whether a Flat, Zigzag, Triangle, Diametric or Symmetrical is forming can only be determined (well in advance) by employing advanced NEoWave observations which focus on the price, time and complexity development between waves-A and B.
Under NEoWave rules, a Flat or Zigzag is possible only IF wave-B takes the same amount of time or more as wave-A (wave-B will usually consume much more time in Flats than it will in Zigzags). If wave-B takes less time than wave-A, a Triangle, Diametric or Symmetrical is forming.
In all expanding and contracting Triangles, wave-A will be the most violent segment of the formation, even if it is the smallest in price (i.e., it should cover the most price in the least time from high to low, or from low to high). If this rule is not met, a Neutral Triangle is forming OR another non-Triangle pattern is underway.
If wave-B is around 38.2% of wave-A, it must take less time than wave-A to be part of a NEoWave Neutral Triangle. As a result, in any A-B sequence where wave-B is around 38.2% of wave-A in price, but takes MORE time than wave-A, a Zigzag is forming, not a Neutral Triangle.
As wave-B approaches 61.8% of the price of wave-A, the time it consumes will increase. As it does, wave-B may equal the time of wave-A, but if it is less, only a Triangle, Diametric or Symmetrical is possible.
As wave-B exceeds 61.8% of wave-A, it normally will take more time than wave-A; if it takes less, a Triangle, Diametric or Symmetrical is forming OR the rally you are calling wave-B is just smaller wave-a of larger wave-B.
In general, NEoWave theory tells us that the more SIMILARITY there is in price, time and complexity between adjacent waves of the same pattern, the greater the odds a NEoWave Symmetrical is forming. If time and complexity similarity exists between most of the waves, but not price similarity, a NEoWave Diametric is forming. If complexity is similar throughout, but not time and price, a Triangle is probably forming. If vast time, price and complexity differences exist between three adjacent wave segments, a Zigzag is forming. If vast time and complexity differences exist, but price coverage is about the same among three adjacent waves, a Flat is forming.
Given the similarity of price and time exhibited by each leg of a symmetrical, is that pattern more likely to drift sideways rather than trend up or down?
Answer:
From personal experience, the reverse is more common. Symmetricals are so time-consuming (relatively speaking) that it is nearly impossible for a market to hesitate long enough to complete the entire pattern during one, sideways period. As a result, Symmetricals tend to have a decided upward or downward bias. Initially, their "trendy" nature can make them difficult to identify. But, after a Symmetrical passes its halfway point, the extreme price/time similarities between all "same direction" waves makes it easy to determine one is forming.
Since triangles occur frequently, but are often misinterpreted, what clues exist to tell you a pattern that looks like a triangle is not a triangle? Answer:
Based on the complex and detailed guidelines of NEoWave theory, the early determination of whether a Flat, Triangle, Diametric or Symmetrical is forming is based on the relationship between waves-A and B from a price, time and complexity standpoint. Under NEoWave theory, in all Triangles variations where wave-B is at least 61.8% of wave-A in price, wave-A should be the most violent (i.e., it should cover the most price in the least time. This does not mean it is the largest wave, just that it is the fastest from high to low (or low to high). As a result, in any A, B sequence where B is at least 61.8% of the price of wave-A, but wave-B take less time than wave-A, a FLAT is NOT forming. In unorthodox, non-Elliott (i.e., NEoWave) Triangle variations where wave-B is around 38.2% of wave-A, wave-B will take LESS time than A. As a result, in any A, B sequence, where wave-B is around 38.2% of wave-A in price, but wave-B takes more time than wave-A, a Triangle is NOT forming. The time differential fades as wave-B approaches 61.8% of the price coverage of wave-A. As it does, wave-B may equal the time of wave-A. As wave-B exceeds 61.8% of wave-A, it should begin to take more time than wave-A. In general, NEoWave theory tells us the more SIMILARITY there is in price, time and complexity between adjacent waves of the same pattern, the greater the odds a NEoWave Diametric or Symmetrical is forming. The more DIFFERENCE there is between price, time and complexity of adjacent waves of the same pattern, the greater the chances a Flat, Zigzag or Triangle is forming.

Monday, April 15, 2013

Weekly Update: Medium Term Outlook


  1. CNX Nifty opened lower this week at 5550.5 (5697.35) made a lower high of 5610.65 (5754.6) , and made a lower low of 5477.2 (5534.7). It closed lower at 5528.55 (5553.25) for the week.
  2. The RSI(14) slipped to 41 from 42, notably it has been taking support around 40 for many months, so expect some profit booking in coming weeks. Remember it had crossed over to 70 level in the last week of Dec 2012, first time since Dec 2010. Fast MACD has slipped below center line and continues below it's signal line.Momentum indicators continue to indicate weakness, but are oversold. The ADX reading for the week is 20.97, coming off from all time low of 9.48 registered for the week ending 7th Sept 2012.
  3. The Adjusted Volumes for this week were below average. The OBV is in downtrend. The CMF continues below centerline around -0.1.
  4. The Pars Fortunae for this week lies in 21 degrees Pisces. This point is void of aspects. The lord of the first house is Jupiter. Jupiter is conjunct with Moon in 11th house which falls in Taurus. The lord of the second house is Sun. Sun is in the 10th house with Venus, Mars and Ketu, which falls in Aries. The Moon is in Mrigashirsha Nakshatra (27 Nakshatra Vedic System) whose lord is Mars. The 10th house is in Aries, with Sun, Mars and Venus transiting through it.The Sun, Venus, Mars, Uranus are conjunct with each other. The Planetary periods are Mars-Rahu-Jupiter as per Vimshottari System. The Chaturthamsa Chart (D-4) has ascendent in Leo opposing Moon in Aquarius. The lord of the second house (Virgo) is Mercury which is in Gemini, the 11th house. So no clear cut indications this week, it could be a week with mixed reactions, although fundamentally things again look strong.
  5. It's pointless to talk about supports in a falling market, but Nifty is likely to meet some defininte support around 5450. Conversely it could again be a good point for countertrend manouvers. Say, going long in 5500 CE below 5470 odd levels for target of double value. It would be rangebound between 5539 and 5749, while it would be oversold below 5461. Any Short covering could take CNX Nifty upto 5635.



Sunday, April 7, 2013

Weekly Update: Medium Term Outlook


  1. CNX Nifty opened lower this week at 5697.35 (5707.3) made a higher high of 5754.6 (5718.4) , and made a lower low of 5534.7 (5604.85 ). It closed lower at 5553.25 (5682.55) for the week.
  2. The RSI(14) slipped to 42 from 47, notably it has been taking support around 40 for many months, so expect some profit booking in coming weeks. Remember it had crossed over to 70 level in the last week of Dec 2012, first time since Dec 2010. Fast MACD has slipped below center line and continues below it's signal line.Momentum indicators continue to indicate weakness, but are oversold. The ADX reading for the week is 20.5, coming off from all time low of 9.48 registered for the week ending 7th Sept 2012.
  3. The Adjusted Volumes for this week were below average. The OBV is in downtrend. The CMF continues below centerline around -0.1.
  4. The Pars Fortunae for this week lies in 4 degrees Gemini. This point is void of aspects. The Moon is in P.Bhadrapada Nakshatra (27 Nakshatra Vedic System). The second house from Pars Fortunae is Cancer and it's lord is Moon. Moon is conjunct with Mercury, also the lord of the first house, in the Aquarius or the 9th house. The 10th house is in Pisces, with Sun, Mars and Venus transiting through it.The Sun, Venus, Mars, Uranus are conjunct with each other. The Planetary periods are Jupiter-Venus-Rahu-Saturn as per Vimshottari System. Bears are gotta be very very cautious as Time doesn't favour negative manouveres, beyond a certain extent, probably Wednesday. Also both down and up moves would be severe.
  5. It's pointless to talk about supports in a falling market, but Nifty is unlikely to breach the magic number of 5456. Conversely it could be a good point for countertrend manouvers. Say, going long in 5500 CE at 5460 odd levels for target of double value. . It would be rangebound between 5590 and 5790, while it would be oversold below 5525. Any Short covering could take CNX Nifty upto 5692.

Thursday, April 4, 2013

Nifty Moves

CNX Nifty: Immediate Resistance 5635; Immediate Support 5569. Oversold below 5600.