Wednesday, January 2, 2013

Daily Market Trend Guide -- Wednesday, January 02, 2013

MARKET TREND FOR TODAY                                                                       January 02. 2013
Though the Markets resisted yesterday all throughout the session to the upper end of the broad trading range that the Markets have been trading in, it portrayed a very buoyant undercurrent as it ended the day with decent gains. The Markets opened stronger on a positive note and remained positive throughout the session. After opening on a positive note, the Markets spent the session, in a more or less sideward trajectory, butt during the day, did not lose ground and witnessed sustained across the board buying. In the mid session, it went on to give the day’s high of 5963.90. It again traded sideward until the end of the session and finally ended the day at 5950.85, posting a decent gain of 45.75 points or 0.77%.

We are all set to see a strong gap up opening today which shall be caused as a reaction to the US Senate clearing the US Fiscal Cliff deal. This gap up opening shall cause the Markets open above the upper end of the broad trading range that we have been trading in since over a month and a half and thus, the Markets are set to achieve a technical breakout on the upside today. The intraday trajectory shall be crucial to see if fresh buying continues or some profit taking comes in. 

The resistance levels for today would be 6020 and 6045 and the levels that were acting as resistance until today, i.e. 5950 and 5930 shall act as supports in case of gap up opening.

The lead indicators present little different picture as RSI—Relative Strength Index on the Daily Chart is 62.9947 and it does not show any failure swing. But it NIFTY has set its 14-day high but RSI has not and this is Bearish Divergence. The Daily MACD is still bearish as it continues to trade above its signal line. HOWEVER, this might change as technical breakout is achieved due to external news flows. However, it also indicates mild chances of profit taking coming in at higher levels.

On the Derivative front, NIFTY Futures have added over 6.35 lakh shares or 3.88% in Open Interest and NIFTY PCR stands little higher at 1.02 as against 1.01.

Having said this, technically speaking, we are set to achieve a technical breakout and this shall, technically speaking put the Markets in state of upward momentum for the immediate short term. Going further from there, little profit taking can be expected.

All and all, stage set for upward technical breakout and upward momentum for the immediate short term. Profits should be monitored for existing positions and should be protected and booked at appropriate levels. Selective purchases can also be made. Overall, positive outlook is advised for today.

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

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