Tuesday, May 3, 2011

Daily Market Trend Guide -- Monday, May 02, 2011

MARKET TREND FOR TODAY


As mentioned, the Markets failed to capitalize on the positive opening on Friday, as after trading in a capped range, the Market slipped and ended the day with losses after a brief recovery at the end and in the process  have continued to form a lower top and lower bottom on the Daily High Low Charts.

For today, expect the Markets to open positive and trade in positive at least in the initial trade. With the Markets expected to open on a positive note, a technical rebound is likely and this it would be further aided if the Markets remains in rising trajectory. For today, the levels of 5885 5785 and 5830 shall act as resistance and the levels of 5700 is likely to act as support for the Markets. The lead indicators continue to present a mixed picture but with a bias of upside now.

The RSI—Relative Strength Index on the Daily Chart is 48.6431 and it has reached lowest value in last 14-days which is bearish. Also, RSI has given a new 14-period low on daily charts which is a bearish Divergence. The Daily MACD continue to trade below its signal line.

However, on the Weekly Charts, the RSI is 52.0704 and is neutral as it does not show any negative divergence or any failure swings. The Weekly MACD has given a BUY signal as it trades above its signal line.  Further to this, it is important to note that with the Friday’s decline in the Markets the NIFTY Futures premium has fallen drastically and it has added massive 10..99% in Open Interest which indicates heavy shorts in the system. Also, the Markets took intraday support on its 100-DMA and has taken support at 200-DMA at Close. All and all, it is advised not to short in such markets as technical rebound is very much likely. There are bright chances that even with some weakness, at least short covering may be seen anytime. However some tentative approach may be seen ahead of announcement of RBI Credit Policy is likely but short may strictly be avoided.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

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