Monday, August 4, 2014

Daily Market Trend Guide -- Monday, August 04, 2014

MARKET REPORT                                                                                              August 04, 2014
The Markets ended the week on a bearish note as it extended its down move and ended the day on Friday with losses. The Markets opened on a negative note however showed quite resilience in the first half of the session. The Markets, after opening on a lower note, attempted to recover most of its losses by afternoon trade. However, after this, in the second half of the session, the bearish sentiment took over and later intensified. The Markets saw selling pressure coming in and it pared nearly all of its recovery. It later drifted lower and went on to form day’s low of 7593.90 towards the end of the session. No major recovery was seen being attempted and it finally ended the day at 7602.60, posting a loss of 118.70 points or 1.554% while forming a sharply lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today, we can expect a pullback from the Markets and expect it to open on buoyant note. It is important to note that we have been reporting a “Broadening Formation” on the Daily as well as Weekly Charts and this is a classical reversal formation. Within this formation, the Markets would continue to post intermittent pullbacks. Today as well, we can expect a positive start to the Markets.

For today, the levels of 7660 and 7710 would act as immediate resistance to the Markets. The supports exist at 7574 (50 DMA) and further down at 7495 levels.

The RSI—Relative Strength Index on the Daily Charts is 46.8887 and it remains neutral with no bearish or bullish divergences or any failure swings. The Daily MACD stands bearish as it has reported a negative crossover today and it now trades below its signal line. On the Weekly Charts, RSI has just crossed below its topping out formation which is bearish. Also, Weekly RSI has reached tis lowest value in last 14-periods and this is bearish. Further, RSI has set a new Weekly low whereas NIFTY has not yet and this is clear Bearish Divergence on the Weekly Charts. The Weekly MACD still remains bullish trading above its signal line.

On the derivative front, NIFTY August futures have shed 7.44 lakh shares or 5.63% in Open Interest and this is clear indication that offloading has been seen on Friday’s session and no shorts have been freshly created.

Going by the pattern analysis, it is clear that the Markets are undergoing a classical reversal pattern and during this phase, we would see intermittent pullbacks but this pattern would see a overall bearish implication in the immediate short term. The volumes would be critical to confirm this reversal. It would be higher when the Markets pares its gains and relatively much lower when the Markets would see any intermittent pullbacks.

All and all, positive and strong opening expected today. It would be important to see if the Markets sustains this opening and capitalizes on that. Any purchases, if any, should be made selectively. In coming immediate short term, one will have to rely heavily on individual stock specific performances. Overall, cautiously positive outlook is advised for today.

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


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.