Friday, February 3, 2012
MARKET TREND FOR TODAY February 3, 2012
Yesterday’s session remained quite volatile as the Markets saw two side swings reacting to the Supreme Court verdict as it cancelled 122 licences of telecom companies but ultimately went on to end the day with modest gains despite unfavourable technicals on account of continuing fund flows. The Markets opened on a positive note and made its intraday high of 5289.95 in the early morning trade. It however, lost ground suddenly reacting to the news as it pared all of its gains and dipped into negative and gave its intraday low of 5225.75. It recovered again, but traded in a range to finally end the day at 5269.90, posting a modest gain of 34.20 points or 0.65%. It has continued to form a higher top and higher bottom on the Daily High Low Charts.
Technically speaking, it has given a breakout from the falling trend line as drawn / shown above. But again, if this is read along with the lead indicators, the analysis remains more or less similar to that of yesterday.
For today, expect the Markets again to open on a flat note and trade range bound in the initial trade. The intraday trajectory would again continue to dominate the trade and the volatility is expected to be seen. For today, the levels of 5300 and 5325 are resistance and the levels of 5190 and 5140 are supports on the Charts.
Having said this, we again would like to draw attention that the lead indicators in the Markets continue to point towards impending correction and immediate weakness. The RSI—Relative Strength Index on the Daily Chart is 71.3410 and it does not show any failure swing and is now in “OVERBOUGHT” territory again. Further, the NIFTY has given its 14-Day high but RSI has no. This is BEARISH DIVERGENCE. The Daily MACD continues to remain above its signal line but on the Candles, A Spinning Top has occurred. During a rally, it usually signals potential loss of momentum in the Markets.
Having said this, again, we reiterate our stand of caution in the Markets. The flow of funds have been driving the Markets but it has got technically dangerous since last couple of sessions and we continue to reiterate that no aggressive long positions should be built as such drives, once over, shows equally sharp correction and there are chances that one gets up trapped with purchases at higher levels. Though stock specific activities would be seen, any long profits should be booked / protected at higher levels and high degree of caution should be exercised.
Consulting Technical Analyst,
Thursday, February 2, 2012
MARKET TREND FOR TODAY February 2, 2012
Wednesday, February 1, 2012
MARKET TREND FOR TODAY February 01, 2012
The Markets saw a very sharp pullback rally despite falling from overbought levels on Monday and it again closed with robust gains, near its important resistance, though on litter lower volumes. The Markets opened on a positive note and remained so throughout the session as it went on to give its intraday high of 5215.40 and ended the day at 5199.25 posting a robust gain of 111.95 points or 2.20%. In the process, the Markets have formed a higher top and higher bottom on the Daily High Low Charts. The Markets have ended the Month with gains of nearly 600+ points.
For today, expect the Markets to open and start on a flat note and look for directions. The intraday trajectory would be extremely important to see if the Markets continues with it s up move or consolidate / corrects as it has closed near its important resistances. For today, the levels of 5225 and 5240 shall act as resistance and the levels of 5145 and 5090 shall act as supports.
The RSI—Relative Strength Index on the Daily Chart is 68.2339 and is neutral as it shows no negative divergences or failure swings. The RSI has been just short of giving a Bearish divergence as yesterday’s intraday high just fell short of 2-odd points from the high of January 27th. The Daily MACD continues to trade above its signal line.
Having said this, it is also important to note that the Markets have closed near its very important resistances. The first on is 200-DMA which is 5198 today. The second one is the falling trend line, a pattern resistance which is drawn joining tops since its lifetime highs of 6388. The credibility of these resistances remain because of the facts that the Markets would again get “overbought” with some rise again as it just escaped giving negative / bearish divergence yesterday.
To add to this, more than half of NIFTY components have shown decrease in Open Interest with yesterday’s rise, signifying more of the short covering rather than buying.
To conclude, even though the Markets show some continuation of up move, it is making it unhealthy. Even though it remains liquidity driven, such unabated rise makes it unhealthy and equally prone to sharp correction. We strongly continue to sound caution at these levels and advice to remain highly selective in buying and vigilantly protect profits at higher levels. Overall, cautious outlook is advised for today.
Consulting Technical Analyst,
Tuesday, January 31, 2012
MARKET TREND FOR TODAY January 31, 2012
The Markets saw its much overdue correction creeping in perfectly in lines and as expected by us in our yesterday’s edition. The Markets opened on a negative note and remained so for the entire session. It kept itself in a negative falling trajectory for the entire session and it kept making new intraday lows. It made an intraday low of 5076.70 and ended the day at 5087.30 with net loss of 117.40 points or 2.26%. With this, the Markets have formed a sharply lower top and lower bottom on the Daily High Low Charts.
For today, there are chances that the Markets spend the session in a range bound trade. The Markets are expected to open on a mildly positive to flat note and trade in a range in the initial session, thereafter deciding its trend, but more or less the consolidation / correction in the Markets is expected to continue. For today, the levels of 5125 and 5150 shall act as resistance and the levels of 5060 and 4985 are expected to act as supports on the Charts.
The RSI—Relative Strength Index on the Daily Chart is 62.4570 and it has just crossed below from a topping formation which is a Bearish sign. It does not show any negative / positive divergence and is neutral. The Daily MACD still continues to trade above its signal line. On the Candles, A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are "high," it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance.
Having said this, the Markets have resisted at its 200-DMA of 5205 levels which is also a trend resistance with the falling trend line drawn from its lifetime highs of 6388. In addition to this, NIFTY Futures have shown net decrease of 8.86 lakh share in Open Interest which clearly indicates profit taking. Further, due to this, this levels have become immediate top and no fresh up move is expected until the Markets moves past these levels. What we will see until this happens would be some range bound movement and consolidation with little negative bias. So, even if we see positive opening in the initial trade, there are all chances that the correction may continue or the Markets may trade in a range. Fresh aggressive longs should be initiated only after 5210 levels as no fresh sustainable up move can be expected until that. Stock specific action, however, would still be seen. Overall, cautious outlook is advised for today.
Consulting Technical Analyst,
Monday, January 30, 2012
MARKET TREND FOR TODAY January 30, 2012
The Markets on Friday continued its up move though in a visible reluctant manner while continuing to be in “overbought” condition and ended yet another day with gains and extending its “overbought” range. The Markets opened on a positive note and after trading in capped range pared all of its gains in the late morning trade to trade flat. It recovered again to inch up and ended the day at 5204.70, posting a gain of 46.40 point or 0.90%. In the process, it has formed a higher top and higher bottom on the Daily High Low Charts. The Markets have ended the week with net gains of 156.10 points or 3.06%.
For today, we can expect a long overdue correction to creep in. Today, expect the Markets to open on a lower note and trade in a range. The intraday trajectory would decide if the Markets shall consolidate or correct a bit with volumes continuing to play important role. The Markets have been moving upwards back on liquidity despite being in “overbought” range for some time, but such rise needs to get corrected / consolidated which would be in fact healthy in the long run. The Markets have resisted on Friday to its 200-DMA.
Today, the Daily Charts and Weekly Charts present a contradictory picture. The Daily Charts are heavily “overbought” whereas the Weekly Charts shows bullish signs but are seeing a major pattern resistance as shown below.
The RSI—Relative Strength Index on the Daily Chart is 75.8942 and it is in “overbought” range. Having said this, the technical reading on the Daily Charts very clearly suggests that the correction, which is long overdue is expected anytime. The Markets have risen nearly 600 points in last 14 sessions and this kind of rise, even though it is liquidity driven, gets unhealthy if it continues in the “overbought” range in this manner. Thus, a correction is overdue and it would be healthy for the Markets in the long run.
Overall, it is advised to refrain from making any fresh purchases and any profits on the long positions, especially in the NIFTY stocks should be very vigilantly protected as most of them too continue to trade in “overbought” range. Overall, cautious outlook is advised for today.
Consulting Technical Analyst,