Wednesday, November 12, 2014

Daily Market Trend Guide -- Wednesday, November 12, 2014

MARKET REPORT                                                                          November 11, 2014
Markets consolidated for the fifth day in a row as it moved in a capped range and ended the day with minor gains after good amount of volatility. The Markets saw a positive opening and after opening positive, it went on to form the day’s high of 8378.70 in the morning trade itself. However, as expected, the Markets saw some selling pressure at higher levels. It not only pared its gains gradually but went on to dip in the negative in the afternoon trade while forming it’s day’s low of 8321.85. However, the remaining second half of the session was spent recovering from the day’s low. The Markets did manage to recover its losses and went back to trade in the positive territory. It finally ended the day at 8362.65, posting a minor gain of 18.40 points or 0.22% while forming a slightly higher top and bottom on the Daily Bar Charts. 


MARKET TREND FOR WEDNESDAY, NOVEMBER 12, 2014

The Markets are again likely to see modestly positive openings today and there are chances that the Markets attempts to inch upwards. However, with the Markets remaining in “overbought” zone for a while now, any attempt to up move can meet selling pressure at higher levels and reduce an upward move to ranged consolidation.

The levels of 8375 and 8420 would continue to act as probable resistance levels as the Markets would then trade in uncharted territories. The supports would exist at  8270 and 8215 levels.

The RSI—Relative Strength Index on the Daily Chart is 72.6228 and it has reached its highest value in last 14-periods which is bullish. It does not show any bullish or bearish divergence and it also trades in “overbought” territory. Daily MACD remains bullish while trading above its signal line.

On derivative front, the NIFTY November futures have added 70,150 shares or minor 0.30% in Open Interest. This can be interpreted as no major shifting of positions on either side has been witnessed. No major unwinding or creations of fresh positions have been observed.

Looking at pattern analysis, the Markets have been severely consolidating near the upper rising trend line of the broadening formation on the Daily as well as Weekly Charts. Normally one can interpret this as extremely bullish in the immediate short term but it also has to be kept in mind that the Markets are “overbought” and this can prevent any runaway rise and can also cause some selling pressure at higher levels.

Overall, there are chances that the Markets continues to attempt its up move and in the process severely consolidates as it has been doing since last 5 sessions. It is advised to utilize any up move to protect profits on long positions. Fresh purchases should be extremely stock specific with more emphasis on defensive and other sector specific stocks. Though under current certainly remains intact,  positive caution is advised for the day.

Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member:
Association of Technical Market Analysts, INDIA


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