Tuesday, May 7, 2013

Daily Market Trend Guide -- Tuesday, May 07, 2013

MARKET TREND FOR TODAYB                                                                 May 07, 2013
The Markets remained volatile within a range bound trade yesterday as it moved in either directions and ended the day with modestly positive gains. The Markets opened on a moderately positive note and soon dipped into the red in the early minutes of the trade to give the day’s low of 5928.45. Thereafter, it went on to come into the positive territory and moved up almost 40-odd points from its days low. However the afternoon session saw paring of all of its morning recovery as it came off from its morning highs to trade modestly into the negative. The second half of the session, especially last two hours of the trade saw some recovery again as the Markets gave its day’s high of 5976.50 and ended the day at 5971.05, posting a modest gain of 27.05 or 0.46% while forming a mildly lower top and lower bottom on the Daily High Low Charts.


Today’s session would see a modestly positive to flat opening today. Technically speaking, since the Markets have ended the day near the high point of the day, it is likely to continue with its up move today, at least in the initial session. However, the key would be to see if the Market is able to capitalize from its modestly positive opening that it is likely to see. Since the opening levels would be around its pattern resistance, intraday trajectory would be crucial to determine the trend.

For today, the levels of 5990 and 6020 would act as resistance levels for today and the supports come in at 5935 and 5910 levels.

The lead indicators are neutral. The RSI—Relative Strength Index on the Daily Chart is 64.3446 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD is bullish as it trades above its signal line.

On the derivative front, NIFTY May futures have added over 6.36 lakh shares or 3.44% in Open Interest and this is a mildly bullish indicator as the last hours improvement in the Markets can be attributed to some fresh longs and it was not because of any short covering.

Having said this, it is important to note that the Markets face a stiff pattern resistance near the levels of 6000-6020 any as mentioned in our previous edition, any sustainable fresh up move can occur only after the Markets moves past these levels. Until this happens, it is likely to remain in a broad trading range.  At the same time, if  the Markets tests these levels again, it would be either overbought or will see its lead indicators negatively diverging.

All and all, until the Markets moves past the levels of 6000-6020 we do not recommend any aggressive long positions in the Markets. Any positions, short or long, should be taken on extremely selective note and the profits on either side should be very vigilantly protected. Overall, with the Markets consolidating and with no directional triggers, some amount of volatility and possibility of minor correction from higher levels cannot be ruled out. Cautious outlook is advised for today.

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


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