Wednesday, February 15, 2012

Daily Market Trend Guide -- Wednesday, F ebruary 15, 2012

MARKET TREND FOR TODAY                                                     February 15, 2012
The Markets yesterday continued to post rise, continuing to keep itself at dangerous and overbought condition as it ended the day with modest  gains after spending the entire session in a capped and range bound manner. The Markets opened on a mildly negative note and gave its intraday low in the early minutes of the trade. Thereafter, it came into positive and spent the entire session in a sideward 25-point capped range. It saw some typical spurt in the last half hour of the trade and it ended the day at 5416.05, posting yet another modest gain of 25.85 points or 0.48%. In the process, it has formed a similar top and a higher bottom on the Daily High Low Charts.
 For today, expect the Markets to open on a mildly positive note again and look for directions. The intraday trajectory would be important as it was in last couple of sessions to determine the trend as the Markets have been under serious consolidation, even while being in “overbought” range as evident on the above charts. The volumes too would be critical as they have been hovering around its average and have not been extraordinary at all.

For today, the levels of 5428 and 5460 shall act as resistance and the supports comes as low as 5355 and 5290 levels. The liquidity has been chasing the Markets though volumes have hovered around its average. The RSI—Relative Strength Index on the Daily Chart is 73.2444 and continues to remain in “Overbought” range. The NIFTY has made a new 14-day high but the RSI has not and this is “Bearish Divergence” on the Daily Charts. The Daily MACD continues to trade above its signal line. 

Yesterday’s spurt in the last hour of the trade has come with shedding in Open Interest in NIFTY futures. The Markets have seen a multiple tops around 5430 levels and it has been severely consolidating since last couple of days. At the same time, it would be important to note that it remains “overbought” and the lead indicator shows a bearish divergence and shedding in Open Interest. So, in other words, even with positive opening and with  the liquidity continue to chase the Markets and even if gives breakout on the up side after this consolidation, it would continue to remain at dangerous levels and the sustainability of such up move would be in question.

Given this reading, we continue to reiterate our stand of high degree of caution in the Markets. We have  been repeating this often in our previous editions of Daily Market Trend Guide and continue to do this in today’s edition as well. It is advised to refrain from taking any aggressive position, especially on the long side and is it advised to remain ultra selective and stock specific in approach. Overall, cautious approach is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331



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