Daily Market Trend Guide -- Wednesday, November 23, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY                                                   Wednesday, November 23, 2011

Even though the Markets were oversold, the yesterday’s session remained much volatile as global cues weighed more and the Markets moved in very volatile range showing lack of conviction and finally ended the day at 4812.35, up by just 34 points or  0.71% and in the process formed a lower top but higher bottom on the Daily High Low Charts.

For today, again expect the Markets to open on a lower note and look for directions. In case of lower opening, it would be critically important for the Markets to trade above 4775-4780 levels, and in worse case do not breach the 4720 levels which is the very critical filter support of the triple bottom support of 4770-4780 levels.

For today, the levels of 4770 and 4720 shall act as supports and the levels of 4855 and 4890 shall act as resistance on the higher side. The RSI—Relative Strength Index on the Daily Chart is 32.6370 and it has just moved out of the Oversold territory which is Bullish. It is neutral as it shows no failure swings or negative divergence. The Daily MACD continues to trade below its signal line.

It is important to note that today is the penultimate day of the expiry of the current derivative series and thus, the session is also likely to remain dominated with rollover centric activities. Further important to note that cost of carry for December contracts as fallen, widening the discount or decreasing the premium which very clearly signifies that lots of shorts are being rolled over into the next month. Further, any weakness on the Close charts will again make the Markets OVERSOLD. Thus, it is very strong likelihood that we may see a spate of short covering again at lower levels. 

This is  clearly a market not to sell. The investors are advised to utilize this opportunity to make very selective purchases. The shorts should be strictly avoided as short covering may not be ruled out due to reasons enumerated above. The volatility is likely to stay, due to both global factors as well as ongoing rollovers. However, shorts may be avoided. The intraday trajectory would continue to remain important. Overall, faintly positive but cautious outlook is advised for the day.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
http://milan-vaishnav.blogspot.com
+91-98250-16331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com