Thursday, March 22, 2012

Daily Market Trend Guide -- Thursday, March 22, 2012

MARKET TREND FOR TODAY                                                             March 22, 2012
The Markets had a very smart pullback rally yesterday after almost a week of weakness and consolidation as it ended the day with smart gains after spending initial period in some weakness. The Markets opened on a moderately negative note and gave intraday low of 5256 in the morning session. The Markets traded negative for a brief period in the morning session  but it transformed itself into positive upward rising trajectory. It remained in this formation throughout the session and went on to give intraday high of 5372.35. It hovered around those levels and finally ended the day near the high point of the day at 5364.95, posting a robust gain of 90.10 points or 1.71%. In the process, it has formed a sharply higher top and higher bottom on the Daily High Low Charts.

Technically speaking, since the Markets have ended the day near the high point of the day, they are expected to open positive and continue with their up move, at least in the initial trade. However, for today, we can expect a flat to mildly positive opening and Markets shall look for directions thereafter. The chances are that the Markets continues with the up move or consolidates with positive bias.

For today, the levels of the upper range of trading band – 5400-5430 shall continue to act as resistance. The Markets will have to move past those levels in order to reverse the trend and continue for a major up move.
All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 52.7262 and is neutral as it shows no negative divergence or failure swings. The Daily MACD still  continues to remain bearish as it trades below its signal line.

The F&O statistics remain similar to that of yesterday with NIFTY futures shedding some Opening Interest while stock futures adding the Open Interest, and this continues to signify the fresh built up of longs in stocks while some minor unwinding in NIFTY futures.

As mentioned above, the levels of upper range of the trading band, i.e. 5400-5430 will continue to pose a major  resistance. The behaviour of the Markets around those levels would  be critically important for a fresh sustainable up move. Until the Markets moves past those levels, we may see the Markets again continue to consolidate. 

All and all, the bias remain on the upside, but the Markets need to move past the levels mentioned above and until this happens, it is advised to maintain stock specific view and all longs should be very selective while protecting profits with equal amount of vigilance. Shorts should be avoided. Overall, positive outlook is advised for today.

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


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