Daily Market Trend Guide -- Monday, May 23, 2011

MARKET TREND FOR TODAY

The Markets attempted to bottom out on Friday as it staged a smart pullback and ended the day with gains, though slightly off its highs, has formed a higher top and higher bottom on the Daily High Low Charts.

Today, though the Markets ended the day near their highs on Friday, is expected to open on a negative note following weak closing of US Markets and weaker Asian Markets in the morning.

Thus, expect the Markets to open on a lower note and find directions. With the Markets expected to open negative, the levels of 5510 and 5535 shall act as resistance and the levels 5440 and 5415 shall act as supports.

All lead indicators continue to remain in place. The RSI—Relative Strength Index on daily charts is 41.7001 and is neutral as it shows no failure swings or negative divergence. The Daily MACD, though continues to trades below its signal line, is improving. On the Weekly Charts, the RSI is neutral as it shows no negative divergence or failure swings.

Having said these there are some positives that are seen. First, the Stochastic Oscillators on Weekly Chart is in OVERSOLD Position. Secondly, the 50DMA and 100 DMA on Daily Chart has shown positive cross over which is a short term positive. Also, addition of Open interest with rise signifies short covering replaced with some fresh longs.

All and all,  even with weak opening, chances of improvement seen as the session progresses. There are chances that the Markets may see negative opening, and remain negative on temporary basis showing volatility this being expiry week, but no major technical triggers are seen on the down side. It is strongly advised to avoid shorts and use dips for making selective purchases. Overall range bound day expected and thus positive caution advised.

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