Weekly Technical Analysis

21 Oct 2013

- By Vivek Patil, India's foremost expert in Elliot Wave Analysis
Top Stories of the Week     Sensex up 1.7%, testing '2008-2010 highs. CBI names Kumar Mangalam Birla in Coal Block allocation case. Supreme Court orders CBI to probe 6 cases of criminality in Radia Tape case. Former MD & CEO of NSEL arrested.

Sensex testing '2008-2010 highs, watch next 4 days as the rally is slower so far [Technical readings carried forward from previous weeks are shown in italics. Readers can easily identify the new arguments which are written in regular font] Last week we discussed, “the recovery above 20050-100 (Nifty 5950-60) has now resulted in recent action turning into an “Inverse H&S” formation, with its Neckline near 20050 marked in Yellow … This only indicates Bulls having an upperhand … we may see selective, tricky, volatile, ranged or even +ve actions until we see faster retracement of a rallying nd segment, something that can suck the last buyer into the market … Our contention that the current rally is c-leg of 2 Corrective inside „x‟ could be challenged if Sep‟13 High of 20740 (Nifty 6143) is crossed in faster time … The bias is currently +ve, and would remain so until the action closes below Friday‟s gap -up area … we may allow 1-2 day more for a move above Sep-High of 20740 (Nifty 6143). Failure to achieve that, followed by weakness below Friday‟s gap-up area, could be a -ve sign .. ” The truncated week (Wednesday was Id holiday) saw Sensex touching Sep‟13 high of 20740 on Tuesday. However, it reacted lower till Thursday, but only to bounce back fro m previous Friday‟s gap-up area on the last day. At the end of the week, the net close was higher by 354 pts or 1.7%.

The heavyweight Metal/Oil&Gas Indexes outperformed with 3.4% gain each, but the broader Indices like BSE SmallCap and Mid-Cap Indexes under-performed, gaining less than half a percent during the week. By avoiding closing below preceding Friday‟s gap -up area, and by holding the Grey rising channel enclosing last 11 days action, the Index maintained the +ve bias as argued. Despite Bulls having an upper-hand, it took 9 days to retrace the preceding 8-day fall from 19 Sep to 1 Oct. We may, nd therefore, maintain the existing label for the rally as c-leg of the 2 Corrective inside “x”. The action on Friday closed above the Sep-13 high of 20740, the level that had proved resistance on Tuesday. The action forced Bears to run for cover, and attracted last buyers, typical of “distribution” phase we argued for. While pivotals attracted buying support and short-cutting, the broader market under-performed, as compared to Sensex. The latest segment of rally from 1 Oct has now completed 11 days so far. Compared to the preceding „Aug -Sep th th rally from 28 Aug‟13 to 19 Sep‟13, however, the current rally appear “slower”, as was pointed out last week also. The preceding rally had measured 3291 pts from 17449 to 20740 in 15 days. As against this, the current rally, so far, measures 1667 pts in 11 days. The current rally, thus, measures only 50% price in 75% time in comparison . If the current rally cannot add 1624+ pts in the next 4 days, it would remain a “slower” rally. Indeed, this may open a possibility that the development post Aug‟13 is an “Extracting Triangle”. An “Extracting Triangle” is a 5-legged pattern with rallies getting smaller and drops bigger. The current rally (from st 1 Oct), being slower, could be c-leg inside this development, as per labels marked in White color on the Daily chart.
st th st

We may, accordingly, trade with +ve bias, but watch if the rally gradually fizzles out in the next 4 days, and breaks its Grey channel enclosure. The up-trend could have different connotation only otherwise. Last week, the Sensex formed the 3 Bull candle in a row on its Weekly chart, and closed near its previous highs of „2008 and „2010. That attracted tremendous attention from the players. The question to ask from here would be if the last buyer has finally bought into. It is generally seen that after the last buyer gets sucked into, the market is more likely to correct by as much as 30% (some times even 55-60%). The following picture of the „1992-2003 phase is self-explanatory :
rd

As we can be seen on the chart, Sensex moved higher than its „1992 highs during „1994 and „1997, but reacted by over 30% both the times. Later during „2000, it broke 1992/1994/1997 highs, by as much as 1500-1600, only to lose 58% later. After a corrective phase from „2000 to „2003, Index broke „2000 high by 100 pts , but even then shaved off 30% before the next rally could take place. This happened because the 11-year long „1992-2003 phase was a multi-year corrective phase correcting the preceding 11fold rally from „1988 to „1992. We had argued that multi-fold rallies require multi-year consolidation phases to absorb the excesses during the multi-fold rallies.

except “b”. The basic NEoWave requirement is that such a corrective phase should consume more time than the move it is correcting. Indeed.e. On a basic level. probably lasting 7 years from „2008.e.Since the Sensex multiplied 7 times during „2003 to „2008. when legs begin to be similar in time. As was shown on the chart below. It already has continued for 69 months from Jan‟2008 till now. the structure is more likely to form as a Diametric. i. all the legs. i. we argued it could require a multi -year consolidation. accordingly. a move above „2008 highs would be required to justify and modify the corrective phase from „2008 onwards from 7-legged Diametric to a 5-legged Triangle. by reverse logic. The question now is whether the corrective phase would end as a 5-legged Triangle (already into 5 leg. consumed exactly 20 -25 days : th . By alternative thought process. except “b”. As per VP‟s observational rules. more time than the move it is correcting. The current phase from „2008 onwards is correcting the 56-month move from May‟2003 to Jan‟2008. 5-legged Triangle or 7-legged Diametric (which basically combines 2 Triangles). where E ended at Aug‟13 lows. and such a consolidation would. end only after „2015 . it was suspected that the development from Jan‟13 to Aug‟13 was a 7-legged Diametric as was shown on the chart below. of a 7 -legged Diametric tend towards time-similarity. all the up-down legs from Jan‟13 to Aug‟13. E) OR would it continue for 2 more legs and form as 7-legged Diametric. As per Wave Theory. a corrective phase shapes up as 3-legged Flat/Zigzag.

except “b”. The B leg from Mar‟09 to Nov‟10 consumed 20 months. As was shown on the chart below. Under the circumstances.By the same logic. As argued. we had observed all the legs. the fall from Jan‟08 to Mar‟09 was 13 months. . The C leg (from Nov‟10 to Dec‟11) as well as D leg (from Dec‟11 to Jan‟13) maintained the time similarity. it was thought fit that the larger formation from „2008 onw ards to be a 7-legged Diametric formation. B leg can different timewise. on one higher degree. each consuming 13 months exactly. each consumi ng about 13 months since the year „2008. and the same was labeled A of a large 7 legged Diametric formation.

now. Examination of FII buying over the last five years since „2008 shows that the Sensex has not been able to cross its „2008 high despite additional investment of 369901 crs by the FIIs in this period.This long-term picture was published on 6 Feb‟12. therefore. The question. we can open possibility of ending the phase as Triangle only if we see strength above „2008 high of 21207 (Nifty 6357). OR its F leg of the Diametric (where E was the shortest leg instead of usual D) . Currently. even as many stocks have been trading near previous lows in the broader market. The market is being moved mainly on a/c of FII buying heavyweights selectively. The disparity between Sensex and broader market was shown on the comparative chart below : th . As we have been explaining. remains if we continue with the Diametric assumption or complete the post-„2008 development as a 5legged Triangle. we are toying with the idea that the up-move from Aug‟13 lows is either “x” wave inside still forming Complex Corrective inside E. The Diametric assumption also compared well with the 11-year formation previously seen during „1992 to „2003.

and is now attempting to recover abov e the same. the Sensex itself is found struggling at the upper end of the channel shown on the following chart : .While the Small-Cap Index broke below its Dec‟11 lows.

the 30% principle shows that Sensex is at a risk of 25-30% cut every 2-3 years. i. but the move would still be part of the “x”. the 25-30% cut was seen from the tops in May‟2004. Sensex may make another attempt towards the upper channel. just like it did during „1992-2003. it would amount to 7-year+ as consolidation phase. and so far all legs (except B) since „2008 did consume 13 months. in the last 9-10 years. but each time it reacted lower.e. In case +ve options. . The larger structural +ve scenario can open only if the Index breaks / sustains above this channel . To consume the required large amount of time. Such a move could also mean larger E ended in 8 months and F is opening. The last bottom was during Dec‟11. It was argued that after a 7-fold rally from „2003 to 2008. In this period. Sensex has made several attempts to break the upper end of the channel shown above . Index may form a 7-year long consolidation phase from „2008 onwards. ever since „2004.This year. which could end only after „2015. we thought a 7-legged Diametric formation would fit the bill. If each leg of the Diametric consumes about 13 months. Jan‟2008 and Nov‟10 so far. Not related to Wave Labels so much on an immediate basis. Sensex has now completed 22 months since then without a 25-30% cut. May‟2006.

but Index failed. . Indeed. The long-term 7-8 year consolidation should continue in the broader market. Despite all that. wherein “x” can st retrace 1 corrective by 100%. and act as required when the time comes.Even in case the Sensex opens +ve options in the short term as discussed. the broader market has kept itself suppressed. if not on Sensex itself. we should keep the 30% principle in the back of the mind. Even during the current year. Some of the favorite stocks from PSU / Infrastructure virtually turned into penny stocks. but failed every time. the market does not appear running away. The price-potential was based on the assumption that “x” would be part of a Double Three like pattern. With the help of different heavyweights. three such attempts were made. Further many investors‟ stocks touched „2008 lows or even lower levels. mainly with the help of ITC. Under the circumstances. BSE Small-Cap and Mid-Cap Index both shaved off over 30% during „2013. Sensex has been attempting to take out „2008 highs for the last five years.

As we noted.The recent supportive effort was seen protecting the Grid level near 17800 which was shown on the following chart. continues to provide important turning points since the year „2008. Since Jan‟13. the Dollar-Rupee equation keeps guiding the movement of the stock market. The recent high of th Dollar. and later dropped to the lower Grid level at 17800. at 69. . achieved our projections made on 24 Jun‟13. thus. As was suspected.23. Sensex kept reacting lower from the Grid level at 20250. The upside Grid is at about 20250. VP‟s 2450-point Grid System.

it was argued that the Dollar-Rupee equation has an inverted relationship with Sensex. If true. It was argued that in actual terms it could reach higher than 67.67 was the “minimum” level to be achieved by Aug‟14. the BSE Small and Mid-Cap Indexes shed over 30% each during „2013. within 16 months from Apr‟13.In the Weekly Report dated 24 Jun‟13. it was contended that : “The year-long consolidation phase from Jun‟12 to May‟13 on the Dollar-Rupee chart looks like a 3 Extension 5 Failure Terminal. therefore. we had assumed that a major top was made during Jan‟13 as per Jan -Topping Cycle. Dollar can achieve 67 by Aug‟14. the next move should usually achieve 161. As it has been a totally polarized and selective market. the projected level of Rs. On one higher degree.8% ratio to its „b‟ leg from the end-point of „c‟. i. Time-wise. We may. then as per NEoWave principles. the BSE Small-cap universe comprises 459 and Mid-Cap 233 actively traded rd th th . the Terminal could be part of an Irregular C-Failure Flat from Jan‟12. Based on the Wave-structure shown. Remember. after an Irregular C-Failure Flat. Indeed. keep an eye on the Dollar-Rupee equation during the coming week as well. mainly ITC. On the Sensex chart.e. this time the broader market has been leading the bearish sentiment even while Sensex was holding higher with the help of few heavyweights.” As per NEoWave. and watch if the Sensex keeps moving in a direction opposite to Dollar-Rupee. While Sensex consists of 30 stocks. this projection is usually achieved within the total period consumed by the Flat.

during „2003 to „2008 it multiplied 7 times. This long-term picture was fist published on 6 Feb‟2012. While Sensex universe mostly comprise institutional holdings. and end somewhere around Feb-Mar‟14. Again.stocks. we had warned of a major cycle top. Multi-Year long Diametric Formation It was argued that all multi-fold rallies would be followed by multi-year long consolidations. Since Jan‟13. Sensex. except B. Long-term corrective phase on Dow‟s chart from the year '2000 onwards also appears to be a probable 7-legged th . In the previous instance. have consumed about 13 months so far. the E wave from Jan‟13 could also continue for about 13 months. it could a 7 -year consolidation starting „2008. with both D legs highlighted in Purple color rectangles. based on the Jan-Topping Cycle (explained elsewhere in this report). may shape up like a 7-legged Diametric. In the current instance. The Diametric formation from „2008 is also suspected because each of its internal legs. Drawing similarity. We had already followed a cautious approach near the 6 year highs. Earlier during Jan‟13. D retraced 84% of C. So. rose 11-fold during „1988 to „1992. but entered a 11-year consolidation thereafter. broader universe affects the small investor . the D leg during „1996-97 had retraced as much as 97% of its preceding C leg. major damages were seen in the broader market as well as many individual stocks and sectors . the consolidation. Further. similar to the consolidation seen from „1992 to „2003. remember.

however. Based on this. Dow‟s Diametric is shaping up as “Diamond-Shaped Diametric”. Jan-Mar Topping Cycle During Dec‟12. under-performed the main Index since the year „2008. th Performance of the Broader Market The broader market has. it was argued that Sensex could hit a major top during Jan‟13. This cycle may be the result of NAV pop-up exercise in the last month of the Calendar Year. as can be checked on the chart below.Diametric. Substantial damage was. the top also occurred during the month of „January . and it did. Instead of “Bow-Tie Diametric” on Sensex. generally. it was pointed out that major tops occurred during Jan-Mar period in the last 13 years. . More than half the times. seen mainly in the broader market. Jan‟13 was the 7 such top forming in the month of „Jan.

th inside which. and has. but took 48 day or 100% time (instead of 50%). made for a tricky and uncomfortable trading environment. however. Indeed. BSE Small-Cap Index retraced only 38.2%.8% time ratio to C. D is now completing 161. it was argued that Sensex would drop below Nov‟12 lows in 50% time of the 48-day long Terminal. This whole thing. NEoWave Discussions Inside the D leg from Dec‟11 to Jan‟13. 5 leg (beginning Nov‟12) was assumed to be a Terminal. The “c” part was a 5-legged Impulse. we had had assumed a 3-legged a-b-c Flat. As an abundant precaution. The Small-cap Index even broke its Jun‟12 levels. and gave a faster retracement to the “c” part of post -Dec‟11 rally. Index eventually did drop below Nov‟12. reacted heavily from this retracement level. following alternate wave-structure was suggested for the D leg from Dec‟11. The divergence between Sensex and broader market appears to be Index management activity. while the broader shows distribution. . therefore.Indeed. Based on NEoWave requirements. in fact. as the Sensex is held by the Index heavy-weights. while the Sensex itself retraced 89% of it preceding 13-month fall from Nov‟10 to Dec‟11. the broader Mid-Cap and Small-Cap Indices have also broken 0-b lines (Red color lines) of the upward D leg.

Since Diametric pattern is made up of Triangles. the larger bear phase is already visible in the broader market. . and also because of the „Jan -topping cycle (discussed separately). allows exceptions to rules at important market turning points or under “unusual” conditions. when the general direction of the secular market has been largely -ve as we suspected since Dec‟12 ? As we argued. considered probable. post-Nov‟12 rally) was a “Double Combination” which ended in Jan‟13. NEoWave “Exception Rule” is also applicable to these patterns . Does it really matter whether the Sensex achieves the pattern implication accurately within the time-price parameters. is a special kind of Impulse which occurs in the last wave position . remember. like end of larger patterns or last wave.e. but more than 100% on broader indices. That would mean 13-month long D-leg has ended at Jan‟13 highs. Since we were at an important turning point in Jan‟13. “c” ended at Oct‟12 high. i. and “e” (i.In the alternate scenario. NEoWave.e. and dealing with Terminal and legs of Diametric. such as a Terminal. therefore. Also. The larger picture of Diametric from „2008 onwards is. Terminal we assumed from Nov‟12 to Jan‟13. perhaps pattern implication rules could not be satisfied to the full extent. The “d” was the smallest segment. Triangles and Terminals are exceptions to virtually all rules. and it was equal to “a” leg. Since „Dec‟12 we turned cautious as the rallies were getting smaller (shaping into a Terminal). and 13-month long E-leg started thereafter. The post-Nov‟12 rally is retraced by 100% on Sensex.

and the same has been broken (as discussed separately). In other words. Sensex. The channel enclosing the a-b-c Flat inside the larger D leg from Dec‟2011 onwards was shown on the chart below : . th nd Zigzag or Triangle.either as “c” of Flat/Zigzag or 5 of an Impulse. 4 of Terminal must enter the area covered by the 2 (Overlap Rule). instead of usual 5-3-5-3-5. consumed 59 weeks to retrace 84% of its preceding 13-month fall. accordingly. as shown on the chart below : th The rally. A line similar to the 2-4 line on Sensex can also be drawn on the broader indices. corrective structure as per NEoWave. Also. each leg of a Terminal would develop as a 3-legged or 5-legged “corrective” structure. which also was a 59-week affair. was considered slower. Its internal structure is made up as 3-3-3-3-3. like a Flat. and not as part of any fresh rally.

most channeled moves enclose a Complex Corrective structure involving “x” wave. cannot be strictly enforced for the legs of Triangle and Diametric. which are exceptions to the general rules. Complex Corrective involving 2 correctives. Further. joined by one “x” wave. carried a pattern implication of 80% retracement by the D leg. since Nov‟10. however. as depicted on the chart below. and therefore. it has been generally useful to consider 61.The 80% retracement level was considered and marked as a pattern implication for the 13-month long Double Combination move marked as C. is called a Double Combination. was a Double Combination. with two equal -sized correctives (see weekly chart given above). and carries a pattern implication of not more than about 80%. Note that the C leg of Sensex. As per NEoWave.8% to 80% retracement area as crucial for terminating moves. Pattern implications. from Nov‟10 to Dec‟11. .

we could have projected 5 wave Extension. because Flat is a 3-3-5 structure. Since E begins the “expanding” phase of the Bow-Tie Diametric.8% ratio to the next largest leg. The 1 and 3 inside “c” of D continued for about 4-5 weeks each.8% ratio. The “c” leg should normally end near such parallel. which would jeopardize the larger assumption of “Bow -Tie” shaped Diametric from „2008 onwards. we were expecting a 5-legged Impulse. preferred 5 of “c” not to achieve 161. achieve 161. Inside “c” of D (beginning Jun‟12) for Sensex. We expected 5 to consume a similar time. It is also a 3-3-5 pattern where “a” and “b” carry corrective label of :3.As per Wave Theory. reason why Flats are called Flats. it would break below Dec‟11 lows. st rd th th st rd th . and “c” is an impulse label of :5. We. The channel indicates similarity of its 3 internal legs. such a move would project values slightly above the Nov‟10 highs. As per NEoWave “Extension rule”. from where a downward E would open. but terminate below Nov‟10 highs.8% of “a”. and end somewhere in the month of Dec‟12 or near to it.e. i. However. where “b” corrects more than 61. Since 1 and 3 were “normal”. and take a parallel from the “a” point. one of the directional leg inside an Impulse should get “extended”. we usually draw a line joining “0” and “b” (0-b line). therefore. Around a Flat. Flat is a 3-legged corrective pattern marked as a-b-c.

we had suspected that development post Dec‟11 has potential only to be marked as D leg of a much larger Triangle or Diametric from „2008. i. which showed a Head & Shoulders formation around Oct‟12 on its Daily chart. A Non-impulsive C leg could only be part of a larger Triangle or Diametric. This Index achieved H&S protection and has now recovered above its 200-day EMA. The D leg is the smallest segment of the Bow-Tie shaped Diametric. Since the projection level also matched with its 200-day EMA. This can happen only when E breaks the bottom Dec‟2011. This option was preferable because C leg from Nov‟10 was not an Impulse.e. we suspected some pull-back. it would be able to generate the necessary downside power for the larger E leg. . since the FII activity turned a prominent factor in the Indian stock market. After breaking the 13-month long channeled C (from Nov‟10 to Dec‟11). we examined the development of BSE Dollex-30 Index. In the 7-legged “Bow-Tie” shaped Diametric from „2008. th th st BSE Dollex-30 Index Meanwhile. we suspected 5 could develop internally as a 1 Extension Impulse or Terminal. Since a “Terminal” always occurs at major turning point. The other half of this Diametric. one can see a reduction in magnitude from A leg to D leg. and therefore. as we expected. E-F-G legs. E should become larger than the D leg.As the beginning part of 5 shows violence on upside. should show expanding magnitudes. It did pull back till Jan‟13. Its downsides later achieved the Head-to-Neckline projection on downside.

though gradually. and now in „2012 is found holding the „2011 low of 15136. This level has not been touched so far. once the yearly low gets broken. As the past instances would show. A 20% magnitude reduced from 15652 would calculate to about 12500 for Sensex. but should be remembered as a crucial level which matches with the huge gap-up action (refer to the Weekly chart discussing 32-week cycle) seen during the „2009. a minimum of 20% cut from the low has been a usual phenomenon.Yearly lows Sensex has broken „2010 low of 15652. .

32-Week time cycle The development since Mar‟09 has followed a 32-week time cycle. as shown on the chart below. .

As we already know. which did prove crucial. but confirms only on faster drop below the Neckline. Right Shoulder became bigger that the Left Shoulder.This was used for raising a possibility that an important low would be formed around 20 Aug‟11. This cycle had also raised the possibility of an upward/sideways phase that could survive for 32 weeks from Aug‟11. However. it shows d > b. which appeared rejecting the Head & shoulders or “Extracting Triangle” argument. th . th st and end either on 4 Feb‟12 or 31 Mar‟12. as Sensex bounced several times from the Neckline. and in the opposite direction. The “e” leg did remain smaller as suspected. it shows e < c < a. Extracting Triangle is a pattern which shows smaller rallies and bigger drops. which is still awaited. which would remain smaller than the “c” leg. The upward phase ended during Feb‟12 as per this cycle. instead of Extracting Triangle. Going by the structural possibilities from this cycle. the 32-week time cycle may remain valid as a cycle even from here. The Sensex was seen testing the “Neckline” shown on the chart. These assumptions indicate an incomplete B. and the same is now marked on the chart. developing as a ranged movement like the Left Shoulder. Thus in one direction. Another idea would be to mark the entire development as a Diametric. Sensex th responded by hitting the bottom on 26 Aug. Above 18000. it was suspected that Sensex could be forming an “e” leg of a possible Extracting Triangle.

measures around 28% so far . 60% of stocks topped out during „Oct‟10 itself. Indeed. and many have already shaved off much more than 30%. and is now protecting the next lower Grid level at 17800. as was observed. the loss from „2010 high does measure more than 30% .Recent recovery happens to be exactly at 32-week cycle turning point. The total loss so far. . from the high of 21109 to 15425. This played out well as suspected. 30% Principle All major tops are characterized by 30% drop from the top value. though Sensex itself shaved off only 28%. that we would see a topping formation spread over 2-3 month period beginning „Oct‟10. These Grids are shown on the Weekly chart of Sensex below. 2450-point Grid chart for the Sensex Sensex has been following a Grid of 2450-2500 points since „2008. This is normal not only inside a bear phase. on BSE Small-Cap and MidCap Index. However. it was argued much earlier. but is commonly seen even inside a bull phase too. Index during ‘2013 reacted thrice from the Grid level at 20250. Overall. The 30% taken out from the current top value on Sensex (21109) would be less than 14800. One can find a bottom or a top getting formed at each of the Grid levels.

considered as the “B” leg. The longer time required while rallying is symptomatic of its corrective label of “B”. during which Sensex rose 7-fold from 3000 levels to 21000. The rally from 8047 (actually beginning at 8867) was. beginning „2008. It may now consolidate for 7 year. the multi -year consolidation is expected to shape up like a large decade-long Diametric. Sensex rallied 11-fold from 390 (Mar‟88) to 4546 (Apr‟92) in four years. In „2008. remember. it usually enters a multi-year consolidation phase. after which.The larger picture Our markets. Our . The corrective phase beginning Mar‟09 retraced about 99% of the previous fall from 21206 (Jan‟09) to 8867 (Mar‟09). each time continuing for about 4 (four) years. after which it consolidated for 11 years from „1992 to „2003. Even though we saw the market reaching levels above Jan‟08 highs. looking similar to the consolidation we saw from „1992 to „2003. (which was labeled as a Triple Combination). Remember. The next leg downwards nd would be labeled as “C”. has seen multifold rallies previously. therefore. In other words. preferably forming as a Triangle or Diametric. it completed another 4-year rally from „2003. Such a-b-c development since Jan‟08 would be considered part of the 2 wave of what appears as a probable Terminal beginning „2003. We explained that the 14-month fall from Jan‟08 was a Triple Combination “A” leg of a large multi -year consolidation. “long-term” has always meant 4 years in Indian context.

This 5 wave is st suspected to be forming as a Terminal due to absence of impulsive behavior in its internal 1 wave. Remember. the IT stocks. Similarly. As shown on the chart below. The Sensex is assumed to be under the influence of a large 8-year cycle ever since its birth. lost as much as 90% of their top valuations by the year '2003. the leading stock of '1992 bull market. which were leaders of '2000 rally. One may see the Yearly chart in Appendix. we were sitting on this very important cycle. During „2008. accordingly. The “Terminal” confirms when the Sensex drops below the 2-4 line of one higher degree. the cut was almost 58% from 6150 in „2000 to 2594 in „2001. We had. Break of this long-term channel also weighed in favor of a larger corrective phase following this 8-year cycle. was broken when the Index moved below 17200. we‟ve considered „1984 as the beginning point for the most dynamic 3rd wave. which was used earlier to project 20000 level for the Sensex during „2007. The suspected corrective phase beginning Jan‟08 would be the 2 wave within the larger 5 wave. shown on ASA Long-Term chart under a separate paragraph. Sensex lost 57% from 4546 to 1980. shown below. The next two important turning points occurred exactly 8 years thereafter. in '1992 and '2000. In the previous 8-year cycle top during „1992. ACC. Terminal development usually violates the 2-4 line. In the next cycle top. which shows the 2-4 line and its values for the next three years. remained below its highs till end of '2004. In our Super-Cycle Degree count. the leaders of the rally had extremely difficult time later.trading/investment strategies should be designed accordingly. time-wise. and a minimum of 13 months into bear phase. because of which. The yearly channel. threw up similar possibilities. The price-time targets were achieved as Sensex dropped 63% from 21206 to 7697. '1984 was the beginning of 8-year long bull-run till '1992. Both these turning points were marked by stock market scams. targeted sub-10k levels for Sensex price-wise during „2008-09. nd th th . For example. which therefore.

F.E Index ('1969 to '1980) and Sensex (thereafter till date). This Index has been created by combining a very old Index compiled by a British advisor (from '1938 to '1945). consider following ASA Long-Term Index. with RBI Index ('1945 to '1969).Appendix : Super-Cycle-degree Wave-scenarios for Sensex For Super-Cycle-Degree wave-scenario. .

would determine if the post „1984 Impulse is a Super -cycle-degree 3 or th 5 . The detailed wave-count from „1984 onwards can be seen on the Monthly chart given below.The wave-count presented shows that the market is into the lower-degree 5th of the SC-degree 3 or 5 wave. and Monthly chart below. rd th . The 2 -4 line shown on the ASA rd long-term Chart above.

such a projection gave 20000 as the “minimum” target. th th rd th rd . Within the non-directional legs.2% of 3rd value-wise. The chart below also shows 11-year parallel channel from Apr'1992 to May'2003. and 161.8% time-wise. rather than an “impulse”). and 261. The Sensex is now forming the 5 Wave. 2nd was exactly 61.8% time-wise. While the 4 is shown as a 3-legged a-b-c Flat on the monthly chart above.8% st th ratio to the 1 on log scale. because st its lower-degree 1 wave from May‟03 onwards developed as a Diametric (which is a “corrective” structure.Super-Cycle-Degree 3 (or 5 ) began since Nov‟84. This forecast was achieved. and the same could develop as a ”Terminal”. if one projects the width of this channel on upper side.8% of 1st value-wise. As shown. Its internal 3 was an “extended” leg. the 4 is shown as a 7-legged a-bc-d-e-f-g Bow-Tie Diametric on the Monthly chart below. which achieved exactly 261. Alternatively. The 4th was 38.

marked as a-b-cd-e-f-g. followed by an “Expanding” one. we are into its 2nd wave. "g" was equal to "a". The Diametric development from „2003 to „2008 is considered to be the 1st wave of the Impuse. which could continue to develop over a period of 7-8 years beginning „2008. As mentioned above. the higher-degree 5 could be developing as a Terminal. Accordingly. st . and the legs on either sides of it tend to be equal. Since „2008. The contraction point is the "d" leg. both showing about 60% gains.. Due to the co rrective st th structure in the 1 leg. It is called "Diametric" because it combines two Triangular patterns. Similarly. one initially “Contracting” up to the "d" leg. both showing about 115% gain. the lower-degree 1 from May‟2003 to Jan‟2008 appears to be a Bow-Tie Diametric. "c" and "e" were equal in "log scale".

th . because only a 5 of a 3 cannot be a Terminal. The Super-Cycle-Degree marking for 1 and 2 as shown on ASA long-term chart.As per NEoWave. and If the 5 proves to be a Terminal. the Superrd th th rd th th Cycle-degree label of 3 will have to change to 5 . would then change to 3 th and 4 respectively. break of 2-4 line confirms a Terminal development. Only a 5 of the 5 can st nd rd be a Terminal.