TURNING POINTS FOR WEEK ENDED 08.10.2010

NIFTY FUTURE WEEKLY

Pleased to inform you that my article titled "IMPORTANCE of 50% LEVEL......" is published in the current issue of The Educated Analyst - an e-magazine published from Australia. Please visit http://www.educatedanalyst.com/the-educated-analyst/gann-studies

PLEASE CLICK ON "INVESTMENT IDEA" under Pages.

After 5 weeks of sustained up move, Nifty Future closed lower this week. At this juncture we have to consider this as Nifty Future taking a breather. The only top formation idea i can relate to is the "Divine Guidance" referred by me, as a post script in the post dated 4.10.2010.

In case of Bank Nifty, the top seems to be in place as per the Time Price idea that I follow. Moreover, this weeks' close is below the trend line - suggesting weakness. It will get further confirmed, when it starts trading below 12400 next week.

Another important feature for the next week is, that it will be 144th week, from the previous top of 6336. This could make the week quite an eventful one.

We are in a sustained up move for 19th week. Such a long up move had happened even when 2008 Top of 6336 was formed. As shown on the weekly chart, that time we topped out in the 21st week and then had a sharp down move. At this juncture there are no reasons to suggest a sharp down move, but a healthy correction is definitely welcome, as it will make the market stronger.

Major threat to the market should be considered only when market trades below 5550. Till then we have to consider it as a 'healthy correction' and a good buying opportunity - at lower levels.

Another interesting event I see repeating like last time is, that just before the Top was formed, we had a successful mega IPO of R Power (Private Sector) and this time around we have a mega IPO of Coal India (Public Sector). Whether this will also be preceeded/succeeded by a top? Only time can tell.

These similarities remind me of a famous W D Gann quote:

There is nothing new under the SUN, what has happened in the past, will repeat in the future.

While I will be giving turning points in my post for Monday, I can only say that, risk reward ratio for long position is definitely unfavourable at this stage, hence cautious approach will be prudent.

Have a nice week end and enjoy the festival of Navratri - without worrying for the market.

Ketan Asher.