Waiting for Monday.

Hre is an email I received 2 days ago:
“… i am always been reader of your sites, i get lot of information from your analysis and many thanks to you for such a kind of valuable analysis. I have one doubt sir that i often hearing that market player operate nifty to move here and there and also taking contra trading postion during intraday. Is it really possible to move nifty as they like? If it so, there is no meaning of technical analysis, dow theory and so on so. If there weren’t real bull and bear operation, there is no use talking about T.A. and fundamentals. I hope, could you give me a fine answer for my question?. ”

My Notes: I do not think anyone person or fund can manipulate the Nifty if the sentiment is not in favor of the manipulator. This means, if a fund wishes to move up the Nifty, it may try to buy selected heavy weights, also buy futures in large volumes to give the impression of a new trend. But, if market sentiment is not in favor then the opposite trades will quickly come in and the effort is not likely to be successful. But, suppose the market is slowly getting bullish, then the fund buying will actually encourage more buyers to come in. We should not think of this move as manipulation, it is the effect of big money. That happens in all markets. Technical trading works well in markets with liquidity and participation.
It is far easier to manipulate small and mid caps. Specially in India where we have very lax moral values. I usually avoid this segment altogether.

Vinod Dhandapani has asked for my view on a Nifty Elliot Wave forceast in afraidtotrade.com . Corey suggests that the up move in the Nifty may be correction of the previous bear market. We are at a resistance point, from which we could decline to 2500. But, the analysis stands cancelled if the Nifty were to cross 5000 or so.

My Notes: Well, the Markets can do anything, can’t they? Our job is to determine how we are going to respond to market moves. A number of analysts have forecast similar scenarios. But, ask yourself: how are you going to trade it? Trading this wave count requires you to keep a position trade (short) with a stop loss of 5000 aprox. The decision depends on the trader. There is no such thing as a ‘painless’ trade. I do not understand or use Elliot waves. A detailed answer follows in the next section.

Markets break out above 4400
Friday’s breakout from a range is good enough sign for me to expect higher levels. The only reason I am not taking this as a confirmed breakout is the news event on Monday – the budget. If the markets rally after the budget, we should expect much higher levels as the rally comes after a trading range and subsequent breakout. If the markets fall, we are back inside the range.