We have been talking about K shape recovery(Markets going up contrary to the fundamentals of the markets) Now the elliot wave count is shifting to extended waves. Extended waves just mean the last 5th wave extending into another 5 waves.

Extended waves only occur when money flows in either by the frenzied crowds or big institutions driving the markets up or both. One of the basic rules of the wave count theory is simply that the fall after the extended waves is much sharper and deeper.

I will try to explain this concept in the figure below

The mention of making all banks healthier by simple absorption of bad loans by a newly created ‘bank’ in the Indian budget for this purpose is putting lot of liquidity in the markets by magic. (The new ‘healthier banks’ lending more money freely)

How to trade these markets

I will never advocate becoming a daily trader by using derivatives or short term cash market for the average investor. You will simply be taken out in a very short time. The only way for long term investors is either to buy limited good value stocks in small amounts or chase momentum in short term. The latter requires some training and knowledge which I will try to give in my master class.