Thursday, April 19, 2012

Daily Market Trend Guide -- Thursday, April 19, 2012

MARKET TREND FOR TODAY                                                                 April 19, 2012
The Markets consolidated yesterday after Tuesday’s up move as it pared some of its gains after a positive opening and finally ended the day with moderate gains. The Markets opened positive following positive global cues,  but gave its intraday high of 5342 in the morning trade itself. After opening positive, the Markets saw some low volume profit taking as it drifted and remained in slightly falling trajectory. It basically found resistance at the 50-DMA and after drifting for the entire session,  bit  by bit on low volumes, it finally ended the day at 5300, posting  a minor gain of 10.30 points or 0.19%. In the process, it has formed a higher top and higher bottom on the Daily High Low Chart. At Close, the 50-DMA which is 5338 today, has acted as resistance.

Today, consolidation is expected to continue as the Markets are likely to open on flat to moderately positive note and look for  directions. The intraday trajectory would be critically important, all lead indicators and F&O data point towards underlying trend remaining intact.

For today, the levels of 5338 and 5380 shall act as immediate resistance on the Charts and the levels of 5278 and 5240 shall act as immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 51.7928 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD, however, has reported a positive crossover and it now trades above its signal line and it is bullish.

The NIFTY Futures have added nearly 8 lakh shares in Open Interest and Stock Futures have added little over 3 crore shares in  Open Interest. Nifty PCR stands at 1.12 with significant room on the upside.

Having said this, it is important to note that as we have been explaining in our previous editions, there is no breakout or breakdown on charts and the Markets continues to remain in a consolidation mode due to the reasons mentioned above. So, the conclusion is that the Markets do have a positive bias but has a statistical resistance at 5338 in form of 50-DMA and further in the range of 5400-5420 levels. So, until the Markets moves past these levels, we will keep seeing movements like that of yesterday due to profit taking activities, but still keeping the underlying trend intact.

All and all, it is advised to continue to remain stock specific while avoiding aggressive positions. Short should clearly be avoided. Any weakness should be used for selective stock picking, while continuing to protect profits at higher levels. Overall, cautiously positive approach is advised for today.

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


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