Friday, February 17, 2012
MARKET TREND FOR TODAY February 17, 2012
The Markets saw a fierce consolidation yesterday where it shed some weight in the middle of the day, but recovered to end the day with negligible losses. The Markets opened on a negative note as expected and remained in the volatile downward trajectory as it went on to give the intraday low of 5483.75 in the afternoon trade. However, in the second half, it saw some recovery, as it recovered to trade flat. It ended the day at 5521.95 posting a negligible loss of 10 points or 0.18%. The volumes remained above average at 1.80 lakh crores but less than the previous session. It has formed a lower top but higher bottom on the Daily High Low Charts.
Today, the tussle between the technicals and the liquidity will continue. There is nothing on charts that warrant a strong opening. However, we are set to see a strong opening today following strong global cues. The Markets are expected to open strong despite contrary technicals and then depend upon its intraday trajectory, if they are to continue with gains or begin a correction.
The levels of 5560 and 5595 are statistical resistance today and supports comes as low at 5400 and 5345 levels.
The lead indicators continue to show the Markets in dangerous condition from technical aspect. The RSI—Relative Strength Index on the Daily Chart is 76.7239 and it continues to remain “extremely overbought”. It is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade above its signal line. On the Candles, A Spinning Top has occurred. When this happens during a rally or near highs, as in case with NIFTY, it indicates a potential reversal of trend. This, however needs confirmation.
Another statistical indicator that shows the Markets over-stretched is the NIFTY PCR which is now 1.65, a notch below being overbought.
Having said this, liquidity is likely to continue to chase the Markets, but as often repeated in our previous editions, the correction is imminent and is now “seriously long overdue”, given the above reading. We continue to reiterate to remain ultra selective and stock specific today avoid any king of aggressive positions. When the liquidity stops a mad chase cannot be told, but whenever it does, it gives a violent and sharp correction and this can be harmful to retain investors who potentially get trapped at higher levels. The rise, however fundamentally justified, is technically unsustainable without a correction / consolidation. Therefore, high degree of caution in the Markets should continued to be exercised.
Consulting Technical Analyst,
Thursday, February 16, 2012
MARKET TREND FOR TODAY February 16, 2012
The overbought markets saw a spate of short covering yesterday as it opened on a higher note, went on to give a breakout from the brief consolidation over last couple of sessions and went on to end the day near its highs, while positing robust gains as liquidity continued to chase the Markets. The Markets opened on a positive note and remained in the upward rising trajectory as it went on to give the intraday high of 5542.10. The Markets saw a brief profit taking, but went on to end near its highs at 5531.95 posting a robust gain of 115.90 points or 2.14%. The Markets have went on to give a sharply higher top and higher bottom on the Daily High Low Charts.
For today, expect the Markets to open on a moderately lower note and look for directions. The intraday trajectory would continue to remain the key decider of the trend and there are chances that the Markets consolidates yesterday’s gains.
It is important to note that though liquidity has been wildly chasing the Markets, they continue to remain terribly overbought. Majority of components of NIFTY and other sectoral Indices remain heavily overbought and thus any positions for the retail investor shall bring with it imminent risk of correction anytime. Statistically speaking, the resistance for today is expected at 5560 and 5590 and supports comes as low as 5450 and 5370 levels.
The RSI—Relative Strength Index on the Daily Chart is 77.9877 and is extremely Overbought. The Daily MACD continues to trade above its signal line. The NIFTY PCR is 1.61 as against 1.47.
Though the volumes have been much higher yesterday at 2.49 lakh crores, our advice for today would remain similar to what we have been advising since last couple of sessions. The Markets, though driven by liquidity, are being driven bit madly and has all the potential to trap the retain investor at high levels. Given the technicals, the correction stands imminent and overdue in the Markets. As a consultant, we have no methods to see when liquidity will stop chasing the Markets, but can surely read the technicals which shows the Markets and most of its components heavily “Overbought”. We, therefore, continue to reiterate our advice to the retail investors to stay away from taking aggressive positions. Any purchases should be highly selective and in the non-index components and highly stock specific. High degree of caution is advised for today.
Consulting Technical Analyst,
Wednesday, February 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.
Consulting Technical Analyst,
Monday, February 13, 2012
MARKET TREND FOR TODAY February 13, 2012
The Markets on Friday showed some further signs of correction as it ended the day with modest losses after spending the brief morning session into the green. The Markets opened into positive and gave its intraday high of 5427.75 as it traded positive in capped range in the morning trade. The Markets thereafter transformed into negative falling trajectory. In the early afternoon trade, it not only dipped into the red, but went on to give its intraday low of 5341.05, coming off 80-odd points from its day’s high. It saw some recovery towards the end but still ended the day at 5381.60, posting a modest loss of 30.75 points or 0.57%. With this, the Markets has continued to form a Parallel Bar once again on the Daily High Low charts and has ended the Week with net gains of 55.75 points or 1.05%.
For today, expect the Markets to open on a flat note and look for directions and today, the intraday trajectory would determine if the Markets are to consolidate in a range or continue with the correction. The Markets have formed a Parallel Bar on the Daily High Low Charts but with the difference that it has ended the day on the lower side and theoretically speaking, this shows likelihood of continuation of correction.
The levels / range of 5400-5430 have become immediate top for the Markets and no sustainable up move will occur until we move past those levels. For today, the levels of 5400 and 5430 shall act as resistance and the levels of 5310 and 5275 shall act as supports.
The RSI—Relative Strength Index on the Daily Chart is 71.5846 and it is neutral as it shows no negative divergence or failure swings. However, it continues to remain in “overbought” range. The Daily MACD continues to trade above its signal line.
On the Weekly Charts, the RSI is 57.8331 and it has reached its highest value in last 14-weeks. On the Candles, A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.
The NIFTY February Futures have declined more (49 points as against 30 Points Nifty) and has also shown a decline in Open Interest which shows some unwinding in February Futures. Overall Open Interest has increased and this signifies the possibility of profit taking in February futures and overall short creation in next month’s futures. The NIFTY also has a pattern resistance at 5400-5410 levels on Weekly Charts too.
All and all, no sustainable up move is expected until the Markets moves past 5400-5430 levels and that too with its lead indicators in place and not with them in “overbought” range. Until this happens, it shall either trade in range, or might continue with correction which is now imminent and overdue. We continue to reiterate our stand of exercising high degree of caution and any long positions should remain highly stock specific and selective. Overall, cautious outlook is advised for the day.
Consulting Technical Analyst,