“Last Friday, we anticipated NIFTY to complete its current bullish structure by forming a higher high above 25,800 and a lower low below 25,377. This structure was activated on September 12th when NIFTY decisively broke through its critical resistance at 25,333. From that point, the market’s dynamics became increasingly intricate and intriguing. The rallies in U.S. indices on September 11th and Indian indices on September 12th shifted the short-term outlook for both markets to bullish. This typically suggests a timeframe of approximately 12 to 15 days. Consequently, we should be nearing the culmination of this short-term trend within the next 3 to 4 trading sessions. The market’s actions over the coming days will be pivotal for ensuring a harmonious alignment of price and time cycles.”

Technically, near-term support for NIFTY is currently at 25,700. This level of 25,700 was calculated by drawing a diagonal of a square constructed using the closing high of 25,940. If NIFTY drops below 25,700 on an end-of-day (EOD) basis, it could be dragged further lower towards its pattern completion point of 25,377. The major structural support would be at 25,250. A drop below that level might push NIFTY towards a retest of its September 9 low of 24,753. Therefore, 25,700 must break first, followed by the other mentioned supports.

Regarding time, September 26 is a key date, followed by October 1 and October 3. October 1 is particularly important because it is a price and time squaring date.

“S&P 500 Consolidates: Key Levels to Watch”

Lastly, let’s discuss the S&P 500, which has been consolidating since last Friday. As discussed earlier, there are no signs of weakness until it holds the September 19 low on a closing basis. Resistance on the upside is at 5,775. On the time front, September 26 is an important cycle date, followed by September 30 and October 1. Interestingly, the S&P 500 and Dow Jones Industrial Average are exhibiting a similar intermarket divergence with the Nasdaq, reminiscent of January 2022. If the Nasdaq fails to reach new highs, history might repeat itself.”

Markets are still digesting the FOMC policy. Actually, the overall positioning was for a 25 basis point cut, but since we got a 50 basis point cut, cross-asset equations needed rebalancing. This resulted in a significant up day in the U.S. markets. In the U.S., we were watching Thursday’s session closely because it was a key cycle date. Therefore, yesterday’s low on all U.S. indices would be a very important level for the next few days. A break of that low on a closing basis would drag indices towards their supports. For the S&P, those supports stand at 5610 and 5475 on the downside.

“Similarly, for NIFTY today, the intraday low is a key date. Regardless of its value, it will be crucial for the coming days. As we discussed earlier, the U.S. markets will likely turn first, and other markets, including Indian markets, will follow. Until then, there’s little to anticipate for Indian markets.”

“The positive aspect is that volatility has picked up on the price fluctuation front.
However, this is not reflected accurately in the VIX index.
We still need the VIX to rise in the future. As broader markets underperform and private banks outperform, we should see a higher VIX.”

For NIFTY  we need a higher high above 25800 and then a lower low below 25377 to complete current pattern additionally  on time front Every third day from today until October 15 will be a significant day for NIFTY. The importance of these dates will become apparent as we continue to monitor the market.”

“Tonight’s FOMC meeting could be a watershed moment for global markets. As we’ve been anticipating, the Fed’s decision could trigger a seismic shift in risk asset sentiment. Once this event is concluded, we might witness a dramatic market downturn, likely starting tomorrow or Friday. However, it’s important to note that this decline might not necessarily begin today.”

“U.S. markets are currently the most influential, as their performance often sets the tone for global markets, including India. If the U.S. markets experience a significant downturn, it could validate the sell signals that have been emerging from time cycle analysis since early September. To monitor this development, we’ll be focusing on U.S. markets starting tomorrow evening and Indian markets from Friday morning.”**

Following this event, we anticipate a surge in market volatility. India’s VIX is expected to spike to 16, while the CBOE VIX could reach 22. If these levels are breached, a market panic is imminent. For the Nifty, major support levels are at 25,000 and 24,750 on the spot. For the S&P 500, major support is at 5,475. Regardless of how distant these support levels may seem, once volatility increases, it could take only a day or two to break through them.

https://ganninsides.com/2024/09/08/the-september-storm/

“NIFTY reached its near-term pattern target of 24,755 on Monday morning but was unable to close below that level, halting further downside price expansion in the immediate term. The index recovered after hitting this support, but the current setup remains bearish. Technically, it will continue to be bearish as long as NIFTY spot doesn’t close above its September 2nd high of 25,333. While this seems unlikely, if it happens, it won’t change our view of a potential test of the 24,020-24,320 zone, which is also its multi-pattern support on the weekly charts. In all likelihood, a test of these levels is inevitable. Therefore, regardless of the market’s short-term movements, the overall trajectory remains bearish.”

“Tonight’s U.S. CPI release could significantly impact markets. While investors were once fixated on CPI, recent shifts in focus toward labor markets have added complexity to the equation. A cooler-than-expected CPI might initially buoy equities but could weaken the dollar, potentially impacting the yen and, consequently, stocks. A hotter-than-expected reading could force a reassessment of rate cut expectations, potentially triggering stagflation. Additionally, S&P and NASDAQ are approaching their 60-day mark from their July highs. This could lead to increased volatility, which is generally not bullish for the market on more sustained basis beond a day or two.”

“If you’re looking to capitalize on potential volatility, consider adding 25,000 December puts. This strategy aims to profit from market fluctuations. Hold the trade until October 15, allowing the market to naturally evolve. To maximize gains, sell any upside above 25,300 and consistently trade against the prevailing price trend during this period. While I anticipate increased intraday volatility, the overall market remains relatively calm. Let’s see how the next few days unfold for both Indian and global markets.”

The recent Gann cycle date on September 2nd has significant implications for the Nifty index. The high reached on that day now serves as a formidable resistance level. If the index fails to break above this resistance, a potential downward correction could be in store.
When we say a break that actually means a break on a closing basis.
The current spot price support for Nifty remains at 25000. As long as this level holds, the index is likely to remain in a consolidation phase. However, a break below 25000 would signal a potential weakening trend.
Keep a close eye on the INDIA VIX. A reading above 15.2 indicates heightened volatility, which could be a precursor to a market downturn. Additionally, we anticipate a surge in volatility starting next week.
The time period between September 9th and 29th is expected to be particularly volatile for the Nifty and other major markets. Traders should be prepared for significant price swings during this time.