Short-term outlook for the market remains negative: Devang Shah

NIFTY      

CLOSE- 10030 (27.10.2018)

Market closed surprisingly weekly in negative territory. It has broken last week lows on both Sensex & Nifty. It made a low of 10004.55 levels on nifty & 33291.58 levels on Sensex during the week. It has made me surprised & still not conclusive for me that its missing wave-V or Extension case for short-term from wave count perspectives. But changing short-term outlook till we get any kind of further evidence to conclude the end of short-term correction. As the market is near crucial medium-term support levels, one can’t rule out any kind of sharp pullback rally in short term. One should watch out market behavior at these crucial levels.

Although My preferred though is of missing wave-V formation as per chart attached will closely watch out market behavior at these crucial medium-term support levels to get more clarity on the short-term market structure. It still looks like the Ongoing fast & Furious correction of Bull Market, not beginning of any kind of Bear Market to me till we get further evidence of the same. 

The short-term outlook for the market remains negative till Nifty trades below 10710 levels and expecting targets of 9900-9950 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 9951 levels and expecting targets in the range of 12500-12800 levels in the medium term. It may consolidate between 9950-10700 levels in broad range in short-term before further trend established with momentum.

BANK NIFTY also closed weekly in negative territory. It made a low of 24467 levels at the end of the weekly trading session. It's outperforming during the week but surprisingly closed weekly in negative territory. It still looks like missing wave-V of C as per chart attached. One can expect Bank Nifty to consolidate further near the lower end of the range near 24200-23600 levels till it trades below It 25900 levels in short term. 23000 levels is strong support on bank nifty from medium-term perspectives till it holds one can expect higher levels targets till 32000-33000 levels in the medium term.

10000 & 10500 levels is strong support & resistance levels respectively based on option open interest data for current month series. Any kind of such short-term correction or consolidation is buying opportunity for medium to long-term Investment perspectives till medium term reverses. Participation from beaten down broader market midcap & small cap indices is important to watch out from medium-term perspectives from here on.

Momentum indicators Daily KST is in BUY but DAILY MACD is in sell indicating volatility to continue in short term. One should be stock specific & follow the trend with trail stop loss levels till it reverses. Close above short-term reversal levels will confirm further continuation of rally towards 11100 levels on nifty & 36938 levels on Sensex in short-term

Stock Picks: 

As Market is near my crucial medium-term support levels. I would not recommend any new trading ideas for this week till we get further clarity on the overall trend of the market. One should closely watch out market behavior at these crucial levels.

Devang Shah: The author of www.trendtechno.com (Trade with Trend) and an independent market analyst.

Disclaimer: The analyst may / may not have a position in the scripts mentioned above.