Daily Market Trend Guide -- Wednesday, May 18, 2011

MARKET TREND FOR TODAY

Markets had an disappointing session on moderate volumes as it remained in falling trajectory for the entire session to end the day with losses and in the process have formed a lower top and lower bottom on the Daily High Low Charts.

For today, we are likely to see the Markets take some breather from the weakness that we saw in the first two days of this week. For today, we can expect the Markets to open on a positive note and trade in positive at least in the initial hour and look for directions. For today, with the levels of 5475, 5520 are likely to act as resistance and the levels of 5420 and 5390 are likely to act as supports.

The RSI—Relative Strength Index on the Daily Chart is 36.2174 and it does not show any failure swing. The NIFTY has given a new 14-day low but the RSI has not and this is BULLISH DIVERGENCE.

Further to the above reading, the markets have added big open interest with very clearly shows creation of big short positions again. Further to this, the Markets did breach an trend line support of 5440 intraday but has closed on that support. Thus if it opens on a positive note, it would be critically important for the Markets to sustain above this levels of 5440.

All and all, given the reading of bullish divergence, heavy creation of shorts and Markets at trend line support, the chances of markets stabilizing are high. It is strongly advised to avoid shorts and maintain cautiously positive outlook for the day.

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