MARKET TREND FOR TODAY
May 8, 2012
The Markets behaved in line with what was analyzed in the yesterday’s
edition of Daily Market Trend Guide as it opened with a gap down, traded with
loss in the first half of the session and then witnessed heavy short covering
as it recovered over 120-odd points from its day’s low to finally end the day
with modest gains. The Markets opened gap down as expected and traded with
almost 1.8% of losses until the first half of the session as it gave its
intraday low of 4988. However, post FM’s announcement of deferring GAAR for a
year it saw a massive short covering in the second half. It went on to give
intraday high of 5124.75 and finally ended the day at 5114.15, posting a gain
of 27.30 points or 0.54%. However, it has still formed a lower top and lower
bottom on the Daily High Low Charts.
Today, after rising almost over 120 points yesterday from
its day’s low, the Markets are expected to open flat to mildly negative and consolidate.
It has managed to close a notch above its 200-DMA which is 5114 today and thus, as analyzed yesterday it
has kept its support of 200-DMA intact as of now.
The levels of 5150 which is the 100-DMA of the Markets and
the levels of 5180 which is a pattern resistance would act as resistances and
the levels of 5114 and 5075 would is expected to act as support at Close levels.
The RSI—Relative Strength Index on the Daily Chart is
39.5041 and it is neutral as it shows no negative divergence or failure swing.
The Daily MACD still continues to trade below its signal line. On the Candles, A big white
candle occurred. This is generally
considered bullish, as prices closed significantly higher than they
opened. If the candle appears when
prices are "low," it may be the first sign of a bottom.
However, having said this, the Markets still continue to remain in
critical condition. It has satisfied the first test of not breaching the
important support due to the factors mentioned in our yesterday’s edition of
the Daily Market Trend Guide. However, it faces multiple resistances in the
next 100-150 points and it will have good up move only above the levels of
5275. Until this happens, we will continue to see jitters in the Markets.
NIFTY has shed 2% or 388950 shares in Open Interest as the rise
was seen due to short covering. It would be very important to see that this
short covering is replaced with fresh buying. Stock Futures have continued to
show addition in Open Interest which is a positive sign. Also, the NIFTY PCR of
1.01 also point towards positive bias.
All and all, we might see mild negative opening but Markets are expected
to consolidate with positive bias. Very selective stock specific action would
be seen and it is advised to totally refrain from shorts and keep protecting
the profits vigilantly at higher levels. Overall, positive optimism is advised
for today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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