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"Dancing with the Bulls" the title of our 10-March report. The Long and Short report is the Market View for the Month ahead  'Nifty Daily' and 'Nifty Elliott Wave update' are daily and weekly market updates to understanding where we stand at the end of each time frame. The Kondratieff Cycle is the long term economic cycle. The Long term report discusses my thoughts on the Wave structure on the monthly and quarterly charts and how it coincides with economic data. The idea is to focus away from short term trading cycles on the daily and weekly degree and understand the investment environment for equities and other related asset classes. 

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MARKET UPDATE: 21 APRIL 2014

*changes are marked highlighted in brown

Explanatory Note:

The weekly charts did not confirm the end of wave 5. With that wave 5 can extend because this weeks correction down was not impulsive. Touching 7000 not ruled out.

MEDIUM TERM

After an intra week correction the market closed positive for the week not confirming that a top was in place. I believe wave 5 is not complete and still forming. Wave iii is shorter than i and so v would have a max target of 7080. Nifty is also holding above the rising long term channel line for a third week. Taking the 2010-2011 bear market as wave A wave B has two targets into the 2014 highs for a bear market rally wave count. 123.6% which was surpassed at 6720 and 138.2% which is at 7030. In other words staying above 6700 Nifty can go to 6870 [expanding triangle discussed in 'Nifty Daily on Thursday], or go to 7030-7080 cluster as wave v of C just starts and did not end. 6700 becomes a key support. I will cover stocks which have wave 5 of C developing in value wave stocks this week to capture this upside. This should continue till the general elections are complete i.e. 16th of May.

As far as the asset class shift is considered, discussed in the Long Short report, it continues to play out as commodities are slowing building up into an uptrend. Equities have not yet peaked but when they do then the shift of money between these two assets should be complete.

 LONG TERM COUNT 

THE LONG & SHORT REPORT :- The LSR is our detailed monthly forecast of where the markets are headed, including sentiment indicators, inter market analysis, wave counts and a global perspective . Report now available Inside Indiacharts.

Long term Perspective and Basis: 

The latest Kondratieff cycle [Kf] is the only one that gives economic perspective to the business cycle and its impact on stock markets. That an Kf Autumn bull market started in 2001 there is no doubt in my mind now. I have discussed the possibility of a late Autumn bull market bubble like the Y2K repeating if India chose to stimulate the economy last year that possibility now seems ruled out as attempts at inflating the economy failed due to overheating. We continue down into an economic winter without that aberration, unless as a country we choose hyper-inflation. We have not been able to find a way to lower both inflation and interest rates while the private sector gets deeper into debt. The only solution was to attract global money to replace the contraction by government. In a weak global environment that looked difficult but alas we are at least trying. The results so far are negative.

Those hopeful of a bull market ignition should now have been pushed to the sidelines. Since the market has spent a lot of time at the upper end of the trading range in wave X, with participation from fewer and fewer sectors on the upside, the last leg down to be marked Z on the chart below will achieve all the targets of the Long term bear market before it ends in the next 1-2 years. Wave Z starts when all the sectors complete making Long term tops and decline and there is no defense.

The late summer bull market might have only helped in ending wave 3 [Y2000] of cycle degree as shown above. This has led to the belief that a similar event might recur today [Y2012-13]. The weakness of the broad market that continues today is not a signature of such a possibility and without broad market strength you don't get a bull market. I have seen 4 bull and bear markets since 1991 and no matter what anyone tells you bull markets are broad based and every company irrespective of fundamentals goes up. The rise of the fundamentally weak is a signature of bull market strength. So we remain in a bear market since 2008 in the index. Wave Y was anticipated to be an extended decline but truncated within 38.2% retracement of X. The recent X wave retraced 100% of Y in 2013. Wave Z down is likely to test the long term rising trendline at 12500 on the Sensex.

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