Nifty In Technical Charts: Patience — Signals Yet To Emerge

One of the best aspects for the 2024 projection was the sharp reaction and equally swift recovery that was projected in mid-year for the election results. That worked right to the last tic and even though the projection was for a continuation to a new high, the market outdid the dimension of that move. We were of course happy with that exaggerated outperformance because the map prevented us from bailing out and asking us to stay in and that worked out wonderfully this year. This is marked as a brown circle on the chart. 

Next up, the high was targeted for the September-October zone and in the actual play, the top was made at the end of September 2024. This is marked as the brown rectangle. This allowed us to hold on to positions almost to the end of moves, helping us to profit better from the markets. 

My expectations for the last quarter of the year did not pan out as accurately though. I was looking for an overlapping and continued upmove, but instead what we got was a decline in October and November with a mild recovery in December. This is marked as a red rectangle in the chart. 

However, what is interesting is that the smallcap index where most of the retail portfolios are, actually made a high in December! So maybe some signals got mixed!!

Be that as it may, what I want to state here is that it is possible to forecast the pathway of the market well in advance if you know how to do so. Getting it right 12 months in advance may seem difficult to many non-believers of technical analysis but I have been doing this for the past more than 20–30 years and rarely does it blow up in my face. In and through the year, there have been several smaller cycles that have been identified as short term swing highs and lows. In fact, we managed to catch the most recent turns in October (for the third down) and November (for 21st –up) and that ought to have made up for the larger long-term forecast gone awry some. 

The way to work with this kind of cycle forecasting is to use the long-term ones to plan your overall campaign in the market, deciding when to go in aggressive, when to hold and not get shaken off by some noise in the market, when to take profits etc. The smaller cycles can be used to fine tune these actions and take advantage of moves that indicate turning points. As I often write, when price projections meet time projections, the moves shall emerge at intermediate dimensions. 

My projection for 2025 is ready and I shall be publishing that in the next week. So don't miss the next edition of this letter. 

Many more events in 2024 aside from a successful projection. The year was famous for a record of money raised from the markets through IPOs, QIPs and other such deals. Although the FIIs were largely sellers in the year, they have also participated in the IPO and other deals and hence, the net impact on the trends were not strong enough to dent the sentiment.

The year also saw some frenzy hit the SME markets and a good chunk of people migrated or diversified into plays in there. Then, we also saw cryptocurrency flare ups post the election of Trump and I wrote about it soon after the November elections were out, projecting a big rise in Bitcoin. Gratifyingly, the forecast is still playing out with a record-breaking run, posting prices above $100k for the coin. In that same letter, I had held out a warning for gold, stating that a correction may be due. Since then, gold prices have slid a bit and not gone higher. 

So, whether it is long-range forecasting in equity indices or stocks or cryptos or commodities or currencies, a good background in technicals will certainly help out in bettering your returns from the markets. Let no one tell you differently, because these letters will prove that timing the market is the key. All those who say that one should NOT time the markets are either lazy to do it or unwilling to state that they don’t know! Either way, they are the losers.

Coming back into the present, we have a rather desultory time going on right now. Last couple of weeks, in fact, I have been stating that one is better off staying on the sidelines. This was after we tracked the November-December rise to its completion in both price and time. Now, in the week ahead, we have the last of the time turn dates (31st). Price action right now is unclear and low range volatility persists. But Friday trading held out some hopes. See chart 2.

This chart is intraday Nifty futures tracked using the daily CPR indicator. That has been on a continuous downward trend for a while and Friday's gap up move is a small indication of some intent to change tracks. Will it succeed? Friday's action is preceded by four successive overlapping CPRs indicating high levels of uncertainty. The common area covered by the four successive CPRs is around 23,760 and those wanting to play bullish in the next week had better keep their stops below this level. One can also attempt to buy dips into that zone, perhaps expecting retests of that area to survive. Maybe all these will coincide with the next turn day and the market pulls out into a rally continuation?