Daily Market Trend Guide -- Monday, December 21, 2015

MARKET REPORT                                                                           December 21, 2015

Markets failed to confirm its reversal and consolidated on expected lines as it gave up nearly all of its Thursday’s gains to end the day with losses. The Markets saw modestly lower opening but traded in a capped range above its critical pattern support levels of 7800. However, Markets slowly pared its gains and by early afternoon, traded flat and in sideways trajectory near its pattern support. It was in the second half that the Markets saw some pressure coming in. The Markets slipped below its important pattern support of 7800 and dipped further into negative. It saw some recovery coming in the late afternoon trade but the final half hour of the trade saw a even sharper decline. The Markets formed its day’s low of 7753.35 and as it did not see any major recovery coming in, finally settled the day at 7761.95, posting a net loss of 82.40 points or 1.05% while forming a lower top but higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, DECEMBER 25, 2015

Markets have traded very much on analyzed lines on Friday as it tried to defend the levels of 7800 in the morning but later slipped and ended below it. Today, we can fairly expect the Markets to open on a modestly negative note and trade with minor losses in the initial trade. Today, the Markets would again face a resistance at 7800-7810 range and the behavior of the Markets vis-à-vis these levels would be critical to watch out for. Until the Markets moves past these levels, it will not confirm any reversal and would remain susceptible to selling pressures.

For today, the levels of 7800 and 7835 will act as immediate resistance for the Markets. The supports come in at 7740 and 7680 levels.

The RSI—Relative Strength Index on the Daily Chart is 46.4664 and it is neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it trades above its signal line. On the Weekly Charts, the Weekly RSI is 42.5261 and this too remains neutral without showing any bullish or bearish divergences or any failure swings. 

The Weekly MACD remains bearish as well while trading below its signal line.

On the derivative front, the NIFTY December futures have shed over 4.216 lakh shares or 2.24% in Open Interest. This clearly signifies unwinding of long positions in the Markets. The NIFTY PCR stands at 0.78 as against 0.82.

While having a look at pattern analysis, the Markets have continued to resist to 7800 level. Though it defended this level in the first half of the session on Friday, it ultimately slipped below that level and closed well below that. This level was a major pattern resistance that the Markets needed to move past and sustain above that. Therefore, this level will continue to pose resistance for the Markets in the immediate short term. Further, in this situation, even though the Markets have shown good amount of pullback from recent 52-week low and pattern support, it is yet to confirm its bottom and therefore continues to remain susceptible to some more weakness.

All and all, in event of the Markets not confirming its bottom, it becomes necessary that we continue to wear a cautious outlook on the Markets. Until the Markets meaningfully crosses 7800-7810 levels and sustain above that, short term weakness will continue to persist and the Markets will remain vulnerable to selling pressures from higher levels. While remaining highly selective, continuance of cautious stand is advised for today.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

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