Hurst Cycles Trading Software - Accurately Forecast Nifty and Stock Cycles

Thursday, August 18, 2011

4800 is here..what next?

So we are so close to 4800..I am feeling an intense urge to cover my shorts. I am not sure. I see some bounce over here but..I feel its only a waystop to lower lows below 4750 next week. Yeah I think next week will be bad as we go into the 2.5 week Hurst low. Normally I wouldnt give much importance to this but consider all longer term cycles are down, we have to give more importance here. So I am continuing to hold the shorts (2/3 only) from approx 5160 area. Covered 1/3 around 5000 yesterday and holding rest.

I think next week will be bad...After some sort of bounce. Waiting and watching.


Wow 4800 is really calling now :)

Even I underestimated the weakness of this market...In the morning yesterday, I was expecting a bounce from 4970-5000 area to a little bit higher - As I had mentioned, a very weak bounce. This is why I covered 1/3 of the shorts I had from 5160...that and money management rules. But market as usual had other plans and continued to breakdown.

I had mentioned in my earlier post about internals. It was a sea of red yesterday in all the broader stocks - I mean mid and small caps. This was the first red flag. The second was the inability to hold the support range. Yeah I wish I were holding all the shorts but I will take what I have. :)

Technically from a Hurst viewpoint, yesterday was bad. Because the market breached the 5 week low implying that the market is breaking down from a cycles viewpoint as well. Now it looks like 4800 is coming quite fast. Like I said before, break of 4950-5000 range will get us to 4800-4750 in a jiffy. And as I mentioned in one of earlier posts, first target is approx 4768 - the 38.2% retrace of the full rally from Oct 2008.

Long live the power of Hurst! :) ..Ofcourse combined with traditional TA and sound money management.



Very Weak

Looking very weak..Still holding the 2/3 shorts..The hedge lost some money but in excellent profits overall with the shorts from 5160 area. Market not being able to stage a bounce from here shows how weak this market is now.

Will see tomorrow.


Wednesday, August 17, 2011

4800 is calling...Updated...

Ok..some more thoughts and charts..

Past few days, Advance decline stats have been absolutely horrendous..This is very important information because it shows the market's internal makeup and structure and that is quickly falling apart. Now when we look at the full market not just Nifty, it shows a lot of weakness and lot of stocks are crashing every day. This shows the internal weakness and without internal strength, the market cannot move up from here..Apart from weak bounces that will quickly fail.

Today a small bounce is possible which can extend into end of this week. And then next week might again be bad. Either way, the maximum time I would give this current pause in the downtrend (thats only what it is - pause in the downtrend) is until the last few days of August or by September 1st/2nd..After which we should see a move below 4950 and below that 4800/4750. Take it for what its worth!

Now a chart.

Now what I would say first is my software is a bit confused here. So am I. Its a little bit uncertain now on the smaller term cycles. But longer is very clear..i.e we are going toward the longer term low in November mid timeframe maybe a LITTLE bit early.

Shorter term, uncertainty rules now. My main confusion is whether to place the 20 week low on the June mid low or whether to place it on the most recent August 8th low at 4950. If I place it this late, it shows an extended 20 week cycle which I am not very happy with. Still it will be clear after some more time.

So the next 20 week cycle has started - only question is when did it start?

So this recent low could be the 20 week cycle low OR the 5 week cycle low. Confused yet? :)

Even though this might seem confusing, the picture is clear in the medium term to longer term..Not a time to be bullish or bottom pick - YET!

Trade Safe.


4800 is calling...

...But expect a small bounce of couple of days(?)..Not very sure but we are close to support so its possible for market to try one more time to bounce from here.

Still 5200-5230 is rock solid..Short on rallies is still the mantra.

I covered 1/3 of shorts and hedged the rest. Will wait and watch.

I will update this post in some time with some charts and more thoughts.


Tuesday, August 16, 2011

Intraday - 8/17

Ok I had thought of covering 2/3 of my shorts..but I am not getting enough signals for me to go ahead or my targets...So I am holding 60% shorts as of now..I will look to reshort if we continue to rally higher. I am not very sure about this since my initial feel was to cover shorts and reshort higher but looking at the moves today, I think we have more downside coming and risk-reward is in shorts favour. If you want to reduce risk, please go ahead and reduce shorts and reshort higher...But I would not recommend going long considering the shape of the cycles right now. If in doubt, stay out!


Update - 8/16

So far downward pressure has been exerting itself as I thought it would and it should as we go into the 80 week low expected in Nov mid to end timeframe. Expect small bounces in between but the longer term trend will remain down until Nov mid/end.

Today/tomorrow, if we hold above 5000, we might stage a small bounce from there. If however we lose the 4950-5000 range, then like I said before, we will get to 4800/4750 in a jiffy.

I am still short from 5160(mentioned few days back)..added on the bounce yesterday..Today tomorrow I will watch to see if we can hold support..I might close most of the shorts if so.

There was a comment from Nagendra on how low we might go into Nov low and how high/timeframe after that - I want to be clear on this - Hurst defines the timeframes clearly. Targets we get hints on how far it might go..In this case, I have a target of 4500 on Nifty by November mid. I think even 4250-4300 is possible. Can we see below that? Its possible but for me the absolute worst target is 3800/3600 range. Not lower than that.

After the low, then what? Too early to say. But I would suggest you to read my earlier 2-3 posts below..There are lots of important information in there..Some stuff will give you clues on what to expect. Crests will be always translated - Since the next 80 week cycle will be bullish, you can expect a right translation. Read my posts from before to understand more on what I am saying here.

I will post the cycles chart in a few days. Not much change in what I posted before.
We are likely topping the first 5 week cycle in the last 20 week cycle of this bearish 80 week cycle. Its bearish all the way apart from small bounces. Sell the rallies and cover/take profits on the panic dips.

Take a look at CNX IT and S&P CNX 500 normal charts for how bearish it looks..IT index shows a breakout of an Head and Shoulders and even target achieved! Anyone trade this? :)

CNX 500 on the other hand shows a clear breakdown as well over past 2 weeks..Target is more than 20% lower! Check it out...


Monday, August 15, 2011

Some more thoughts - 8/15

I see us in a 4th wave backing and filling confusing everyone is the name of the game. 5230-5250 is resistance..If it manages to get above that, 5350 is the next one. I dont think it will get there but closing above that will be very difficult. So a 5th wave is pending to new lows - Break 5050-4950 range and we will get to 4800-4700 range very quickly..Likely lower.

Till the 80 week low is set in the November timeframe, downward pressure will be there - I would not expect any major rally before that. So short the rallies with stops is the way to go. Also make sure to keep position size very less - we can never know when rip roaring short covering rallies will occur within bear markets.

See attached chart. Looks like a descending triangle to me. So 5230 area is strong resistance. Short with stops around that level in rallies. As always do your own due diligence.

The important retracement levels of the whole rally from March 2009 are 4768, 4285 and 3801...Important numbers which may be possible targets for the upcoming 80 week lows. We shall see as we get closer.


Sunday, August 14, 2011

Nifty Hurst Cycles - 8/15

Starting an update for coming week.

First of all - Happy Independence day to All!

Had a good question in comments from last week from Chandra..A very good and valid question indeed. I will try to explain to the best of my knowledge -

Question -


Thank you for sharing this method in detail. Very interesting indeed. But one question, from your picture, May 2010 seemed like the period where multiple timeframes were converging. Why wasn't that an important low and why should the another 18 month cycle from 2010 may leading into 2011 oct/nov should be given higher importance?

Yes May 2010 period was the last 80 week/18 month low but it was not as pronounced as expected. Why?

While we can never be sure about anything, I think there are 2 reasons for this.

1. Like I explained in earlier posts, always there are multiple cycles running in the market, the combination of which makes the complete composite movement in the market price movement. What we are trying to do with our Hurst analysis or phasing is trying to determine which cycles are present and trying to determine what might be the important possible lows in the market. At certain periods of time, a larger cycle might be pointing down while a smaller one may be pointing up..Hence the larger cycle will dominate the smaller cycle and push the market down. Now take this to the next level; Imagine many cycles acting together in concert - this might not give the expected results and instead we will get a sidewise movement. I believe this is what happened in May 2010.

Take a look at this monthly chart. Now we have the 40 and 80 week and the next highest cycle, the 4.5 year(or 54 month) cycle shown here. 3 80 week cycles make up the 54 month cycle. (there is an important point here - lets see how many spot it)..So in May 2010, we were in the 2nd 80 week cycle of the 54 month cycle. And now in the last 80 week cycle of the 54 month cycle. So now you might be able to get the importance of this particular low - its not only the 80 week low but also a 4.5 year low and also very possibly the 9 year low as well(not shown here)! So the importance cannot be understated here. Watch the falling and rising of the arcs shown here and you can understand..The 54 month and the 18 month and possibly the 9 year are exerting downward pressure here - hence the importance. While in May 2010, not so much.

2. Next, fundamental pressures. Now imagine the intense monetary easing that was happening since the 2008 crash..All this effect was there even in mid of 2010. Hence we got a muted low..Now on the other hand, we dont have that much monetary effect or liquidity..Hence this low might take the natural course. Hurst says that fundamental factors will affect cycles - and cause them to deviate slightly from the norm.
I will give more importance to reason number 1 above..But thought of mentioning this also.

Now you might ask why is this a 4.5/9 year low and why not the Oct 2008 bottom. There are several reasons and methods used to arrive at this which is too much for me to go into at this point but as we go along, you may understand more. Suffice to say, when we phase back, this timing fits best. And also when you look at other markets specifically US as well, this model fits the best overall - this is known as commonality in Hurst language. More on that later.

Either way we are getting a bottom and our job is to figure out when it will happen and after that also, when it might top.

A shorter term look again -

Pretty much same as before. As I said before I believe that the 20 week low came on 6/20 and then the low we had few days back around 4950 was the 5 week low. And now we are having a weak bounce out of that low. So as I have been saying before we are within the last 20 week low in this 80 week cycle. So its a bearish 20 week cycle within likely a bearish 80 week cycle. And the fact that we are severely left translated (read earlier post) confirms this fact.

Still looking for a major low sometime in November. I would harbor a guess of around November 2nd-3rd week for a major low. But as I said we will fine tune as we get closer.

Comments, questions etc welcome.