MARKET TREND FOR TODAY
May 24, 2013
The correction in the Markets intensified today as the
Markets took a deep cut today after opening on the negative note. The Markets
opened on a modestly negative note following weak global cues and even weaker
technicals and remained in negative territory throughout the session. The
Markets converted itself into falling trajectory soon after opening and kept
drifting slowly but firmly for the entire session. The Markets opened below its
pattern supports and never went up again. In the last minutes of the trade, the
Markets went on to give day’s low of 5955.70. It hovered around those levels a
bit and saw no recovery at all. It finally ended the day at 5967.05,
posting a deep cut of 127.45 points or
2.09% while forming a sharply lower top and lower bottom on the Daily High Low
Charts.
Today, we can expect the Markets to open on a flat note and
look for directions but at the same time, we shall see some respite from the
weakness that we saw yesterday. We can expect some stability in the Markets, at
least in the initial session. However, given the rest of the technical
indicators, we can also expect some consolidation at lower levels accompanied
with range bound trade with a downward bias.
Fro today, the levels of 5990 an 6035 are likely to act as
resistance and the supports come in at 5910 and 5890 on the downside. The level
of 100-DMA which is 5892 is expected to act as support if the Markets weaken
further from here.
The lead indicators continue to point towards continuing
weakness. The RSI—Relative Strength Index on the Daily Chart is 48.6538 and it
shows no negative divergence or failure swings. It has reached its lowest value
in last 14-days and this is Bearish. However, it does not show any bullish or
bearish divergence. We have been saying that the Daily MACD is slowing moving
towards a negative crossover. Yesterday, it did report a negative crossover and
today it trades below its signal line and it is therefore bearish.
On the derivative front, NIFTY May futures have shed over
16.50 lakh shares or 6.21% in Open Interest and this very clearly indicates
that there is consistent offloading and unwinding of positions that has taken
place yesterday and no shorts were created. This figures are enough for induce
further weakness in the Markets.
Given the reading of the technical charts and its
indicators, coupled with the F&O data, there are all chances that we see
the correction continuing in the Markets. We might see a minor technical
pullback in between, but overall, the bias still continues to remain on the
downside.
Overall, it is advised that in case of a technical pullback
happening, it is expected to remain short lived and again the corrective
activities in the Markets are expected to take over. Long positions, if any
should be taken very selectively and profits should be very vigilantly
protected. While remaining light on overall positions, cautious outlook is
continued to be advised as the bias still remains on the downside in spite of a
technical pullback which may short lived.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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