The NIFTY’s Descent: A Tale of Timing and Technicals

https://ganninsides.com/2024/12/18/nifty-index-breach-of-support-raises-breakdown-concerns/

“NIFTY experienced a significant breakdown below its critical support of 24,200 on spot on Wednesday. As discussed in the post shared above, the initial target of this major breakdown was projected at 23,800, which the index achieved quite easily.”

The past week witnessed a confluence of three significant time cycle dates – 17th, 19th, and 20th December – culminating in one of the most bearish weeks for Indian markets in the last two years. This bearish sentiment was reflected in the NIFTY’s volatile trading, with a weekly range exceeding 1200 points from Monday to Friday.”

“I have been anticipating this market decline for several days. The current downturn is unfolding as expected, both in terms of timing and severity. As previously mentioned, this leg lower is likely to be more impactful and potentially more dangerous than the declines witnessed in October and the first half of November. However, this major downtrend will likely unfold in phases, meaning that the market won’t decline consistently every day. Therefore, it’s crucial for traders to capitalize on any rallies that emerge to initiate fresh short positions.”

On PRICE FRONT

The NIFTY is likely to encounter resistance in the zone between 23,900 and 24,300 on spot. This range may act as a significant hurdle for any upward momentum in the index.”

On TIME FRONT

“The convergence of two significant time cycle dates next week, December 26th and 27th, is likely to heighten market volatility. Traders should anticipate wider intraday swings and increased price fluctuations during this period.”

“Broadly, I am expecting the NIFTY to drop significantly in the coming weeks and months. However, for the next few days, I would expect the NIFTY to take a breather first. Then, I anticipate a lower low below its November low of 23,263. Finally, it may break its 45-degree angle support of 23,100, which has been calculated from its September high. This would be its second attempt to break this support. And this time, I would expect the NIFTY to finally break through, opening up a genuine possibility for a drop towards its 90-degree angle support, which comes significantly lower. Let’s not discuss that for now.”

Market Crash: My Prediction, Your Reality.”

INDIAN MARKETS have witnessed a relentless selloff since the start of the month. I accept few, if any, actually saw it coming. Actually, in a normal state of mind, people do not anticipate such crazy stuff. But I was one of those few analysts who actually saw this selloff coming. If you have been following me, especially since the second half of September, then you must have been aware of my views. I was very clear with my bearish view and despite the markets moving higher, I maintained my view. In fact, I did put things in technical terms.”

Let’s dive back into two of my posts from that era.

https://ganninsides.com/2024/09/13/us-market-strength-ignites-indian-rally-but-volatility-looms/

“On September 13th, following a 500-point rally in the Nifty, I shared a post highlighting a potential conflict between price and time, which could lead to volatile market movements. Regardless of current market conditions, the Nifty was well-positioned to test the 24,020 level in the coming days. As predicted, the Nifty nearly reached this level on Friday’s low. In the same post, I also mentioned my trading strategy of adding 25,000 put options, which I personally averaged until the premium reached 250. I emphasized that time cycles often achieve their predetermined goals, and this particular instance was a perfect example.”

https://ganninsides.com/2024/09/25/niftys-bullish-structure-nearing-completion/

“On September 25th, I highlighted the completion of a bullish structure in the Nifty Index. I also identified September 26th as a crucial turning point, and indeed, Nifty reached its peak on September 27th. This period was particularly significant for Nifty, as it squared its price with time on October 1st and 3rd. According to Gann Theory, such price and time squaring often signals a major trend reversal.”

Next week, October 28th, marks a critical TIME cycle date for NIFTY. The intraday low on this day will set the tone for the following trading sessions. Stay alert.”

As mentioned, I’ve been holding December 25,000 puts since late September. I plan to lock in substantial profits near the 23,900 level, but will retain a few positions until December’s end. Our cycle studies highlight the 5th August low of 23,893 as a critical pivot for Nifty. A daily close below this level would signal extreme bearishness for the overall market and potentially trigger deeper declines.  I don’t want to put a specific number here because that would deviate many from the whole process of trading with the periodic pullbacks. I have already shared the target with all of my subscribers.”

One very interesting thing that has happened during the last 4 weeks is that Indian markets have been falling while global markets, on the other hand, have been relatively quiet and stable. Although I have been expecting a selloff to take place in global markets as well, so far that hasn’t materialized exactly as I have been anticipating. This week, however, we’re seeing positive signs emerging in several US indices. Let’s delve into that.”

Navigating the Storm: A Guide to the Upcoming Market Turbulence

“This week in the U.S., there are clear and convincing signs of a major reversal on the Dow Jones Industrial Average (DJI). However, the S&P 500 and Nasdaq Composite have not yet fully confirmed this trend.”

https://ganninsides.com/2024/10/12/nifty-finds-footing-but-u-s-market-challenges-loom/

“On October 12th, I predicted a market reversal in the Dow Jones Industrial Average (DJI) beginning on October 14th and in the S&P 500 beginning on October 16th. The indices, however, peaked one day later than anticipated.”

This week, both the Dow Jones Industrial Average (DJI) and the S&P 500 have suffered declines. As discussed earlier, the DJI has already shown signs of a reversal. However, the S&P 500 still needs to break its support level, currently situated between 5720 and 5740. Once this support level is breached, we could see a sharp decline towards 5610 and 5475 in the short term. If this anticipated downturn materializes, the S&P 500 could be poised for a more substantial long-term correction.”

Tech Earnings Frenzy and Potential Downturn: What to Watch Next Week

The Dow Jones Industrial Average (DJIA) has decisively reversed course, signaling a potential downward trend. While the S&P 500 is still hesitant, it’s likely to follow suit, dragging the Nasdaq along with it. Next week Based on historical patterns, the upcoming time cycles around October 31st and November 1st could be pivotal for U.S. indices. Traders and investors should be prepared for increased market volatility as these dates approach. Also, next week, big tech companies are reporting their earnings, which should bring some excitement to the otherwise boring markets. Personally, I’ll be tracking Microsoft’s results very closely.”

“While the current market conditions present challenges, it’s important to maintain a balanced perspective. By closely monitoring key support levels and upcoming earnings reports, investors can make informed decisions and potentially capitalize on opportunities that may arise from market volatility.”

It was a relatively quiet week for Indian markets, which was not unexpected. As I predicted in my last Sunday’s post, the Nifty stabilized from October 8th. True to our expectations, the market did indeed stabilize from October 8th. This has created a temporary support level for the Nifty at Monday’s low of 24,694. As long as this support holds, we should see a rebound towards 25,400 in the coming days. Once this pullback is complete, I anticipate the downtrend to resume, potentially targeting lower levels around 24,400 and even 23,800 in the near future. “If NIFTY fails to retrace and falls below 24,694, near-term prospects could become more challenging. While my primary focus is on U.S. market developments, I anticipate a significant decline in NIFTY over the next few months.”

On TIME FRONT for INDIAN MARKETS I “Predict a significant shift in market trends between October 21st and 28th. Investors should be prepared for potential volatility during this period.”

US Market on the Brink: Technical Analysis Predicts Sharp Decline

https://ganninsides.com/2024/10/06/countdown-to-market-volatility/

Tick-Tock: Countdown to Market Collapse Begins

“Given our previous discussion, a market reversal in U.S. indices is imminent, with a heightened risk period extending through October 21st. Key dates to watch are October 14th for the Dow Jones Industrial Average and October 16th for the S&P 500, both of which align with significant cycle points. While the recent market activity may appear subdued, underlying developments are poised to trigger substantial shifts in the broader market landscape.”

On the price front, S&P tested the 45-degree angle resistance at 5810 on Friday. As discussed in last Sunday’s post, this level of 5810 was calculated from the intraday low of August 5th. Along with 5810, I have been highlighting the range of 5776-5866 on S&P as a very important resistance zone. Based on this analysis, I had already advised some of my U.S. clients to consider adding shorts on December futures contracts at 5810.

“I’m anticipating a potential sharp trend reversal in the U.S. markets starting next week, possibly around the 14th or 16th of October. It should be an interesting week to watch.”

NIFTY’s Steepest Fall of 2024

“NIFTY experienced its steepest weekly decline in percentage terms for the entire year of 2024 on a close-to-close basis. While the market did fall on June 4th, the weekly close for that week was actually positive. This week proved quite damaging to the overall market structure. Technically, on Friday, NIFTY achieved something it had managed to avoid throughout 2024.”

“NIFTY’s weekly chart revealed a multi-pattern breakdown, closing below 25100 on Friday. This significant decline mirrors a similar event in October 2023 but differs from the pullbacks seen in August and May.”

The NIFTY is expected to encounter strong support near 24,750 in the coming week.on TIME front Market dynamics suggest a heightened risk of a global downturn until October 21st. This trend is rooted in historical patterns.
For short term October 8th marks a critical juncture. Intraday lows on that day could serve as a barometer for potential market volatility. A sustained break below this level may exacerbate selling pressure.
Conversely, a failure to breach the October 8th low could offer temporary respite from market declines.”

“Global markets remain relatively stable, but our analysis indicates that this calm may be short-lived.

Specifically, U.S. indices are approaching a significant time-based resistance point around October 8th, which could potentially trigger a reversal. Since October 1st, U.S. markets have been poised for a downturn, but for various reasons, this reversal has been delayed. However, a change in direction seems imminent. Last week, I highlighted the 5,776-5,866 range on the S&P 500 as a strong resistance zone. More precisely, the 5,810 level represents a 45-degree angle resistance line from the August 5th low of 5,119. Therefore, from a geometric perspective, the index is nearing a critical resistance point. However, time may be a more significant factor than price. Several cycles are converging over the next three weeks, so it’s essential to be prepared for potential market volatility.”

https://ganninsides.com/2024/08/30/navigating-the-market-key-support-levels-and-cycle-date/

“September has opened on a bearish note for financial markets, as anticipated. As I’ve previously mentioned, I expected a significant market reversal starting around September 2nd in Indian markets and September 3rd in U.S. indices. This week’s market decline, following the major cycle resistance on the time front, aligns with these predictions. If our calculations are accurate, this week’s downturn is just a precursor to a more substantial market decline. While the road ahead may be volatile, the overall implications remain bearish.”

So “Let’s cut to the chase and discuss the levels.”

NIFTY

https://ganninsides.com/2024/09/05/niftys-recent-gann-cycle-date-and-outlook/

“A breach of the 25,000 level on the Nifty 50, coupled with a surge in the INDIA VIX to 15.2, indicates a potential technical breakdown. Near-term price targets for this breakdown are estimated at 24,755 and 24,522. If the index consistently closes below these levels, it could signal a more pronounced decline, potentially reaching 24,200 or lower without a significant rebound.”

“To trigger a sustained decline, a multi-pattern breakdown on weekly charts would be essential. Currently, the Square of 9 support for NIFTY is at 24,320, and the Hexagon Pattern support is at 24,020. Therefore, NIFTY would need to close below 24,020 on a weekly basis to initiate a multi-pattern breakdown. To reverse the underlying bullish trend that has been in place since October 2023, NIFTY will need to break below these support levels. Failure to do so would maintain the current trend.  I discussed this in early August as well. At that time, the index narrowly avoided a breakdown on its weekly charts, and the subsequent events are well-documented in recent history.”

On TIME front Critical cycle dates for Indian and GLOBAL MARKETS would be on September 13 19 20 and 24

S&P;500

https://ganninsides.com/2024/08/25/market-setup-and-outlook-for-next-week/

“The S&P 500 has been quite intriguing. In my August 25th post, I mentioned a potential resistance level at 5675. The index approached this level closely before turning sharply lower on its critical cycle date of September 3rd. It’s encouraging that it didn’t break above its previous high.”

“Initially, I didn’t anticipate a new high for the S&P and Nasdaq. However, as the indices approached that level, my team and I, as analysts, had to consider alternative scenarios. Interestingly, the alternative path we identified also resolved to the downside after a brief upward surge. A key factor influencing our analysis was our close study of time cycles. These cycles indicated a significant trend change on July 11, which aligned with the S&P reaching its peak on that date.”

Based on our analysis of historical market data, we identified two significant low points: October 13, 2022 (3492) and October 27, 2023 (4103). By applying a proprietary mathematical model that considers both temporal and cyclical patterns, we were able to predict a key turning point on July 11.
there is nothing in this world which cannot be proved mathematically.

Give it a try if you are a gann student.”

“Now that the index has rolled over from a lower high, our obvious downside target would be its August low of 5119 in the next few days. Expect increased volatility starting from September 11th, but eventually, the market will likely drift lower. Utilize sharp pullbacks to sell.”

YEN

“USDJPY is poised to break below its August low, which could further fuel market sell-offs. My previous target of 135 remains unchanged, as outlined in my August 25 post.”

“Given the expected market downturn, now is the time to reassess your investment strategy. Consider diversifying your portfolio and potentially scaling back on riskier assets. Stay informed and prepared for the challenges ahead.”

https://ganninsides.com/2024/08/20/nifty-update-361/

“This week is particularly crucial for NIFTY. As I previously discussed, to sustain the bullish momentum that began in January, NIFTY must reach a new high by either August 26th or 27th. If a new high is established by Tuesday, the underlying structure will remain firmly supportive. In such a scenario, any pullbacks, regardless of their severity, will likely be bought, and the uptrend will continue indefinitely or at least until the current momentum loses its strength.”

Let’s observe market movements during the first half of this week. Technically, markets are positioned for a new high. However, if this high occurs after the 27th or 28th, it might not be as bullish as it seems.
As mentioned earlier, the major trading opportunity is expected in the next two months of September and October. It’s advisable to be prepared for this event.”

Major support for NIFTY lies in the zone of 24,500-24,600 on spot. As long as this support zone holds, we can expect further higher highs in the near term. Time-wise, we have a minor cycle date on August 28th and the major cycle date on September 2nd. The major move I’ve been discussing would likely kick in after this cycle date of September 2nd. That’s going to be very interesting for all of us as traders.

“Honestly, we haven’t reached a point where we can confidently defy the current market trend and make significant profits. There’s a specific time for such bold moves, and right now isn’t it. Until that opportune moment arrives, it’s wiser to focus on the current bullish trend. I’m sure many of you recall my contrarian stance in late July, when I strongly suggested taking bearish positions. The market’s subsequent behavior was truly remarkable to watch and trade. Similarly, on August 5th, when the market was experiencing a sharp sell-off, I clearly stated that if the downturn were to intensify, all indices would need to break below the intraday low of that day.”

https://ganninsides.com/2024/08/05/nifty-feels-the-heat/

“A failure to break below the August 5th low would likely have led to a pullback across all assets. However, as anticipated, Indian indices held above this level, and markets experienced a significant recovery.”

“When discussing a historic recovery, it’s important to consider the recovery in U.S. indices as well.”

In my earlier posts, I had shared targets of 5200 and 15800 on S&P and NASDAQ, respectively. The indices tested those levels and staged a very smart recovery. A retracement was certainly expected, but we were not expecting a fresh high. Although fresh highs have not yet been printed, S&P has almost reached there. NASDAQ is still at some distance from its high. So, during the next few days, we will have to monitor both these indices very closely. Because if S&P manages to make a new high while NASDAQ fails to make a new high, that would trigger an inter-market divergence, which again would not be a sign of a healthy market.

“The S&P 500 may face resistance at 5675. If this level is breached, a further rally toward 5800 could ensue. For NASDAQ, the July high of 18671 could act as a resistance level. NVIDIA’s earnings report on Wednesday evening could be a significant market mover.”

https://ganninsides.com/2024/07/28/development-in-global-equity-and-forex-markets-would-derail-the-uptrend-in-indian-markets/

“Markets have recently become more sensitive to fluctuations in the Japanese yen. I discussed the significance of the yen and the carry trade concept in my previous posts in late July, just before the recent market volatility.”

A yen value below 144 poses a significant risk to all risky assets. If the yen sustains below 143, it could trigger margin calls globally, leaving little time for market participants to react. This could lead to a rapid decline in market values, potentially resulting in a 10-15% loss within a few days. Technically, we anticipate a potential decline to 135 by January. If this level is breached, we could see further weakness, potentially reaching 120 by late 2025. Additionally, a break of the August low in September would be a particularly negative signal for equity markets. Therefore, it’s crucial to monitor the yen closely.

Along with yen Equity markets would be kept under pressure from falling intrest rates as well.
Yes you read that correct.
Lets discuss key points below

One of the primary concerns is the potential for inflationary pressures. When interest rates are lowered, it becomes cheaper for businesses and consumers to borrow money. This increased borrowing can fuel demand, leading to higher prices for goods and services. Inflation erodes the purchasing power of currency, making investments less valuable in real terms. For stock market investors, this can translate to lower returns and a decrease in the overall attractiveness of equity investments. In addition, interest rate cuts can have a negative impact on the banking sector. Lower interest rates reduce the profitability of banks, as they earn less on their loans. This can lead to a decline in lending activity, which can hinder economic growth and ultimately harm the stock market. Moreover, a weaker banking system can increase systemic risk, making the entire financial system more vulnerable to shocks.

While interest rate cuts can provide a short-term boost to the stock market, the long-term consequences can be far more damaging. The potential for inflation, moral hazard, and banking sector instability outweigh the benefits. Investors should be cautious about relying solely on interest rate cuts as a catalyst for stock market gains. A more sustainable approach to investing involves careful consideration of underlying economic fundamentals, company valuations, and the broader macroeconomic environment.

thats it for now.
will sign off for now by wishing everyone a HAPPY JANMASHTAMI

https://ganninsides.com/2024/07/28/development-in-global-equity-and-forex-markets-would-derail-the-uptrend-in-indian-markets/

DEVELOPMENT in GLOBAL EQUITY and FOREX MARKETS actually derailed the uptrend in INDIAN MARKETS.

As i noted in above post  the uptrend in indian markets was not sustainable.
I did spelled out multiple reasons to back that thought process.

I very clearly said that dispite a 500 point upmove of 26th,july upsides on NIFTY is limited and I am no longer intrested in taking long trades.
many of my followers didn’t liked that view but unfortunately i couldn’t help them out.

but now one week down the line many would had realised the whole thought process.
Technicaly we were closely looking for the resistance of 25200 on spot.
INDEX went till 25078   and after that price registered a strong REJECTION  and going forward this REJECTION could gradually turn out a meaningful REVERSAL.


would still take some time for that but that process should be underway.

for short term on price front we could see NIFTY dropping towards 24520 and 24210 on spot in coming days,
and on TIME front 5th,August is going to be a very important cycle date.
if markets starts to sustain below the intraday low of 5th,August then that would make the setup extremely bearish and with that kind of setup for NIFTY it would be easy to break the significant support of 24000.

Lets see  or now mondays low would be of paramount importance for us.

Global markets were extremely in a risk off mode this week specialy Japanese markets and U-S-MARKETS.
NIFTY on other hand was relatively stable.

So lets review the global setup below.

U-S-INDICES first

As i discussed in previous weeks post  we were looking for a counter trend bounce in major U-S-INDICES and during the week we actually got that bounce.
and once that counter trend vounce ended we got a very strong turn lower  and things did unfolded exactly in the manner in which we were looking at.

So lets straight away discussed on the technical setup for S&P and NASDAQ.

S&P

Holding 5340 we were looking for a counter trend rally towards the zone of 5570-5610  initially index successfully managed to hold above 5340 and on Thursday made high of 5566 very close towards the lower edge of our projected zone.
The decline from Thursdays high has been extremely furious where we saw index dropping from 5566 to 5302 in just 24,hours.

Hens after such a sharp decline market would require some time to stabilise.
All though my target for this move for now is at 5200 on downside  I dont expect further one way decline towards 5200.
with vix at 2024 highs    we have to be prepared for extreme voletility on both sides.

eventualy 5200 will come but that still wont be the end of the decline.

Once 5200 breaks index would attempt a further extendtion of its decline towards 5020 which happens to be its 45 degree angle from its july high of 5669.

In my last weeks post i clearly mentioned that on 24th,of,JULY something very significant has happened and that has that potential to trigger a large scale reversal.
If during this decline if SPX drops below 5020 which i am sure it will  then that would officialy conferm my view.
Would discuss this in further detail when SPX breaks 5020.

NASDAQ COMPOSITE

On NASDAQ we were looking for a test of 18100 during the counter trend rally.
but index managed the move higher only till 17800.


Post that it too went for a wild ride on downside where it made low of 16582 on friday.

16800 was a key support here.
As long as index manages to hold below 16800 it would decline further towards 16200 which happens to be its 45 degree angle from its july high.
Once 16200 breaks we should get this index towards the January 2024 low.
Not immidiately but gradually.

Here too voletility is likely to stay extremely high so better not to get carried away with major swings.
A 2%+ up or a down day from here should be a regular affair.

On TIME front  5th,August Which is tomorrow is going to be a very important cycle date,
As i discussed this in indian markets section  above  will repeat it once again     that if indices fails to sustain below 5th,August low then most probably markets would either consolidate or attempt a pullback.
So plan your short term trades accordingly.

coming to YEN now.

Last week i discussed the importance of YEN for the global financial markets.
Unfortunately many in INDIA doesn’t even understand the concept of a carry trade.
I tried to explained that in last weeks post.
but majority still felt that such macro things doesn’t matter for INDIAN MARKETS.

Anyways my job as an analyst is to highlight potential risks which could impact our trades and investments.
My job is not to convince everyone to consider and focus on all points which are discussed on this platform.

Now as far as YEN is cunserned level of 143 on USDJPY cross  is absolutely critical.
Holding 143 things can stabilise but in case for any reason 143 breaks then that can trigger margin calls on all risky assets globally.
Take some time out and research on why that could happen.

thats it for now.
Lets see how things goes post 5th,August.

there is lot to discuss today so lets straight away move ahead and start with INDIAN MARKETS first.

For INDIAN MARKETS BUDGET was the significant EVENT and this tuesday that finally passed.
For NIFTY as I had been discussing constantly that   level of 24,000 is an ultimate support and as long as that support is holding things are likely to stay fine for NIFTY and any decline which holds the level of 24,000 would only be considered as a normal pullback.
No scope for a meaningful REVERSAL or correction as long as 24,000 is held.
On TIME front INDIAN MARKETS in next few days would be approaching a critical turn window so dispite NIFTY making a fresh high I wouldn’t be looking for further long trades to chase this INDEX on higher side.

because the recent fresh high which NIFTY made on FRIDAY came on back of few unavoidable inter market divergences which cannot be ignored.
these divergences are strong enough to restrain the INDEX from generating a trending move on higher side.

In INDIAN MARKETS we have BANKS and RELIANCE which have broken their medium term supports and on the other hand we have AUTO I.T. and ITC which are in a very strong shape technicaly.
So rather going after the NIFTY either on long or short side,
an ideal profitable trade would be to sell BANKS and RELIANCE on rallies,
and,
buy AUTO and ITC on dipps.

I.T. should be an avoid because thats at a very important resistance.

still for NIFTY on upside 25200 is going to be a very strong resistance.

for the entire month of july so far NIFTY has been in 3.5% band so if you are a trend follower then you have not made money on NIFTY in july dispite index making a fresh high ebery week.

Unfortunately we are currently in a state of MARKET where an UPTREND is classified into 2 categories.
In which the primary category belongs to a kind of PRICE action which we saw during the month of JUNE.
Where the price action is very strong which is actually a kind of price action to trade as a trader.

And the other category would be best classified as a choppy uptrend.
where the INDEX does continue to make higher highss.
but the price action in this phase mostly stays sideways.


And during this phase there is nothing to do much as a trader.

accept the month of june entire 2024 does falls under this second category of UPTREND.

Just for reference if you take the month of june out then there are less then 15 trading days where NIFTY have rissen more then 1.5% on EOD basis.

so the point is there is nothing to get exited post fridays price action.

I dont know how many of you remember that  on 1st,of,MARCH,2024 we did got a similar kind of an up day and post that market really didn’t do much for the rest of the month.
1st,MARCH was meanwhile the first day of a new series and 26th,july too was also a first day of the new series.
so connect the DOTS.

now lets move on from INDIAN MARKETS and discuss the setup for U-S-MARKETS

The stock market got a boost at the end of a wild week after key economic data bolstered perpetual speculation about when the Federal Reserve will cut rates. Every major group in the S&P 500 rose Friday on bets that a Fed easing cycle will begin in September, just in time to keep fueling Corporate America and the bull market. That market meanwhile seems to be broadening beyond that narrow group of companies we’ve become familiar with. While big tech has enjoyed massive gains this year, the so-called concentration risk has come to the forefront for many, especially given the disappointing start of the megacap earnings season. Investors who for months saw fewer alternatives to a tight group of market winners are suddenly branching out.


but dont make a mistake to consider the week as a normal week.
Something very significant happenned on WEDNESDAY  which would have painful consequences for overall market going forward.

so lets go through what just happened on WEDNESDAY.

Wednesday might have been frightening if you are the type of investor who follows day-to-day action. The S&P 500 SPX pulled back 2.3% for the day, while the tech-focused Nasdaq-100 index NDX fell 3.7%.
this 2%+ kind of down day on SPX happenned after 507 calendar days and after 356 trading days.
So its something which was the biggest take away from the week gone by.
Not only that CBOE VIX too was up by 22% in a single day on WEDNESDAY and such rise on VIX actually happenned after 13th,june,2022,
So take some time off and think what these things are pointing at?


Obviously things are not going to rollover overnight but look to consider such signals as a warning for a large scale trend reversal.

Coming to levels now

S&P

On 19th,july I shared level of 5510 as a breakdown level for S&P,500 and a downside target objectives below 5510 were kept at 5425 and 5340 on cash.
However on expected lines INDEX broke 5510 and achieved our target of 5425.
but 5340 is still yet to be achieved and my sense is 5340 would hold for few days and for now INDEX could attempt a counter trend bounce which could carry index towards the zone of 5570-5610,on upside and post this counter trend bounce I would expect S&P to register a furious decline which could drag the index towards 5200 rapidly.
In all probabilities I am not looking for a new high on S&P.

NASDAQ COMPOSITE

As mentioned earlier 18,000 was a significant support for NASDAQ and a break of that have almost triggered a mini colaps.


frankly we were looking for a test of 17400 for this leg but index went on to test almost 17,000 which from the top have almost given up 9%.
Now thats a noteworthy decline in just 15 odd days.


On downside another major support is placed at 16800.
Holding 16800 this INDEX too could register a counter trend bounce which could take it towards 18100 and post this counter trend bounce on NASDAQ too we would be looking for a rapid and furious decline which should drag it towards 16000 and lower.

and here too we are not looking for a higher highs above its high registered so far.

so far accept S&P and NASDAQ we do not have a TOP conformation for DJI and RUSSEL 2000.

specialy the DJI dispite the recent pullback there are no conformations for a TOP yet.
RUSSEL is strong but its performence is unlikely to impact other major INDICES.
If the tech sector is turning down then other indices too would join it on downside either sooner or later.

along with tech sector a risk off signal is coming from FOREX MARKETS as well.

In foreign exchange, the balance appears to be turning decisively against carry traders — investors who borrow in low interest-rate currencies like the Japanese yen and park in currencies with higher rates, such as the Mexican peso. It’s a trade that works beautifully unless the currency in which you’re borrowing starts to gain.
the recent strength of Japanese yen against the $ is one of the major reason behind the recent risk off environment which have added pressure in equity markets of U-s and EUROPE.

Yen is more important because the epicenter of the global carry trade has been coming from JAPAN.
Post GFC hedge funds have used JPY to operate the entire ecosystem of this carry trade.
So far it was working fine because intrest rates in JAPAN were below 0 and as of now they are still at 0.

but now BOJ have indicated that they are ready to raise rates.

market is expecting this rate hike in SEPTEMBER but there is a thin possiblity that rate hike can happen as early as next Wednesday where BOJ monitory policy outcome is due.
even,though a july hike is less expected but a SEPTEMBER hike is a done deal.
and here is where things get more intresting.
because in SEPTEMBER itself FOMC would be going for a rate cut.
So there is going to be a policy missmatch in 2 major economies of this planet.

so this policy missmatch is going to make things more uncertain for the YEN and along with it   this uncertainty would spill over to other risk assets as well.

Hens its high time that we should stay cautious at highs.
So for now lets end this here.

https://ganninsides.com/2024/07/16/nifty-successfully-navigates-the-critical-window-on-time-front/

supports shifts higher

NIFTY PATTERN support have further shifted higher at 24480 on spot.

Other then that nothing really have changed from what I did discussed in above post.
BUDGET next week is still the most significant EVENT for this MARKET so next week is going to be absolutely critical for overall texture of this MARKET.
Need to keep an eye on broader markets to get early indications for a trend change.
As I have been discussing here since 10th,of,july  a trend change on NIFTY is warranted but would trigger only with the break of a PATTERN breakdown.

Currently we have a best chance to get that.
lets see.

since early july its BANKS verses I.T.

so far we have seen a tussle between BANKS and I.T.
BANKS have been absolutely sideways since the start of july and I.T. on other hand habe done remarkably well since early july.

NIFTY bank has been going through a phase of distribution but still as long as 51600 is held on spot ongoing distribution phase can go on but if 51600 breaks INDEX would be preparing for a decent pullback in coming days.

NIFTY I.T. is the strongest index among all NSE INDICES.
But closer to 41000 this INDEX too is reaching a saturation point if it turns lower from here from next week along with BANKS them that would be a double blow for overall market.
do watch out for that.

in INDIA we are looking for a turn  but in U.S. that turn has already happened.

As discussed earlier 18000 on NASDAQ COMPOSITE was an important support and on Wednesday we have seen that imdex break below its support.
So finally we got that reversal on NASDAQ but other indices are yet to confirm that.

for S&P that support level is at 5510 and as of now thats still intact.
Once it breaks below 5510 we should get it lower towards 5425 and 5340 in next couple of weeks.
for now better to wait until 5510 actually breaks.

so lets leave it here for now.