RBI in its very recent post has given out a statement that the stock markets are beginning to form a bubble. What this means is that the markets are overpriced OR more than their intrinsic value.
Above has been substantiated by the elliot wave context. There is a wave count adjustment where we are now poised for a 5th wave upward move(correction notwithstanding along the way)
The 5th waves in the elliot analysis are always the last wave and more often than not accentuate the bubble in the making.
This is an opportunity for short term traders , although the long term traders need to be more pragmatic in their approach.
Nifty has made a new high and stayed above the previous all time high for two days consecutively. This gives rise to the change in the wave count where the low of 14200 or so now is taken as wave 4 and the wave 5 is on now.
However there is a caveat to this bullish scenario. The markets as long as keep above 15150 , then only we will assume the 5th wave bull run. (Stop loss 15150)
How far can the 5th wave bull run go.. In the present scenario can say 16000-16500 range. OR nearly 6 percent from here.
Some important observations
RBI has recently warned of a bubble in the making.
In the conventional analysis , some correction is overdue to the rise from 14200.
This correction may come tomorrow or definitely by wednesday.
Below I am giving two charts. One is the overview of the total rise and the next one the short range chart.
Caution in 5th waves.
As per elliot 5th waves form the last wave in the bull run. They can be truncated abruptly, or can rise even till 62 percent of the total rise from 0 to wave 3. (Which comes to 16500) Best way to trade the 5th waves in my opinion , is to keep strick stop losses.
We have changed our view to upside of another 5-6 percent . This should be seen as a part of the TOP in the making for long term investors but an opportunity for short term traders.
Disclaimer- All above analysis is based on elliot wave count and is for academic purpose only. Elliot wave is based on consideration of range of possibilities and is subjective in nature. For any investments , ensure the good fundamentals yourself, by consulting a certified investment advisor.