BJP has been losing almost all the states in the ongoing assembly election and Urjit Patel immediately resignation only resulted into a knee jerk reaction on Equity markets. We are seeing a strong pullback from the lows and despite of all the pessimism and negativity Nifty is currently trading in positive territory!
Shocked! Now understand that if markets were driven by news or events it would have been much easier to make money. History shows that news or events only produces short term spikes or random movement and then the original trend resumes.
In recent history you can see that Demonetization and Trump victory, BREXIT events are classical example that were strongly bearish but market bounced back either on the same day or very next day to the original level from where the fall started. So, today’s movement is no surprise to us.
Also looking at the event and then taking the position is like driving looking at the rare view mirror. It is best to avoid doing that but rely on the patterns and methods that have scientific and systematic way of analysing the markets. We use Elliott wave patterns to understand and forecast the market movement. Now look at the below chart that shows Fibonacci retracement of 61.8% with Neo wave pattern.
Nifty 60 minutes chart:
The above shows a classical bounce back from the 61.8% retracement level. With completion of wave d at the lows and also wave e starting higher.
Now someone who does not know these techniques might not understand it completely but try to think how precisely 61.8% Fibonacci level worked irrespective of the news or event. So it is news that drives the market? I have my doubts!!!
In the morning research report we mentioned the following: In short, overall trend is negative but Nifty closing is going to be very crucial. Urjit Patel sudden resignation clubbed with state election outcome can result into chaotic movement but irrespective of the event if Nifty closes positive it will be a sign of short term low!
It was clearly mentioned as the possibility before the markets opened. Majority would not have even thought about something like this is plausible that BJP losing across the states and Urjit Patel suddenly resigning but Nifty closing up by 60 points. We have been keeping this is as much probable scenario even before equity markets started trading in morning.
We are seeing some amazing movement on equities across stocks and indices. Today’s move was no surprise. You cannot miss this next big opportunity which is going to emerge very soon. Get access to Intraday / Positional advisory – calls along with daily research report – The Financial waves short term update and see yourself why we are not surprised by Nifty movement like majority! Act now. Here is the link
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