Daily Market Trend Guide -- Wednesday, May 25, 2011

MARKET TREND FOR TODAY

The Markets yesterday remained in a capped range, moving in either direction and ended the day with moderate gains, and in the process have formed a lower top and slightly lower bottom on the Daily High Low Charts.

Today, we expect the Markets to first open on a sluggish and moderately negative note and then expect it to improve as the session progresses. This will critically depend upon the trajectory that it forms and it would be important for the Markets to stay in positive intraday trajectory.

With the Markets expected to open on a moderately negative note, the levels of 5420 and 5445 shall act as resistance and the levels of 5350 shall act as support. All lead indicators continue to remain in place. The RSI—Relative Strength Index on Daily Chart is 36.6167 and it does not show any negative divergence or failure swing and is therefore neutral. The Daily MACD continues to trade  below its signal line.

At this point, we would like to pick up from where we left yesterday. We have categorically mentioned in our Thursday’s edition that the Markets are witnessing unnatural behavior and is getting unnaturally influenced through few big players (FIIs) in significant absence on retail participation. Also, in our Yesterday’s edition, we have also mentioned that the Markets are showing reluctance on the downside. Continuing from there, again the F&O data shows huge addition of shorts (large increase in OI), and the PCR near 0.80 which is the OVERSOLD zone. We continue to feel that the markets may remain erratic with movements on either side but the down side remains limited, though we may continue to see erratic behavior on low volumes due to rollover activities. We continue to advice to strictly refrain from shorts and use the weaker openings to make selective purchases. Overall, cautious optimism is advised.

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