Gemstone Equity Research & Advisory Services

Wednesday, April 6, 2011

Daily Market Trend Guide -- Wednesday, April 06, 2011

MARKET TREND FOR TODAY

The Markets yesterday saw some signs of profit taking and correction setting in but that remained intraday as the Markets recovered from its lows to end the day flat and in the process have formed a almost parallel bar with slightly higher top and higher bottom on the Daily High Low charts.

For today, expect the Markets to open on a flat to moderately positive note again and look for directions.

With the Markets expected to open flat to moderately positive, the levels of 5925 and 5940 shall continue to act as resistance. We had categorically mentioned the levels of 5925 acting as Pattern Resistance and the Markets resisted there yesterday and made a high of 5928.65. This range, i.e. 5925-5935 shall continue to remain and act as resistance until this is significantly breached on the upside.

The RSI—Relative Strength Index on the Daily Chart is 71.0859 and it has reached its highest level in 14-days. But at the same time, it is in OVERBOUGHT territory. The Daily MACD continues to trade above its signal line. On Candles, A long lower shadow occurred but it is irrelevant as it has occurred during a rally.

The Markets have failed to breach the levels of 5925-5935 as mentioned and any sustainable up move shall come only if the Markets move past and sustain and trade above those levels. With the RSI OVERBOUGHT, the sustenance above the resistance levels is technically unlikely. Therefore, any blatant longs either in NIFTY or NIFTY Components may prove risky as it has total adverse risk reward ratio. The Markets badly needs to either correct or at least consolidate before any further up move as such up moves are definitely getting unhealthier for investors as such sharp up moves see equally sharp corrections. It is thus advised to remain ultra stock specific in purchases and maintain highly cautious outlook for the day.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331

milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

Tuesday, April 5, 2011

Daily Market Trend Guide

MARKET TREND FOR TODAY

After a day of breather, the markets again ended the day with gains reaching its three month high and in the process have given a sharply higher top and bottom on the Daily High Low Charts. For today, expect to see a flat opening in the Markets. With the flat opening in the Markets, the levels of 5925 and 5950 shall act as resistance and the levels of 5840 and 5775 may act as immediate supports.

The Markets have risen some 650 odd points and some 2250+ points Sensex in past 9-10 sessions practically without any break. Further to this, it has done so purely on liquidity driven scenario defying some major technical resistances as if they never existed and in the process have certainly put retail investors / traders at risk at these levels. The RSI—Relative Strength Index on the Daily Chart is now 71.0226 and is now in OVERBOUGHT range.

In further to this, the Markets have now closed at a Patter Resistance in form of a falling Trend line formed by joining tops from 6335 levels which joins 6181 levels. Today, behavior of the Markets will depend upon its opening above the levels of 5925 and sustaining above it.

Having said this, it would be greatly unhealthy for the Markets with high risk element involved if its continues to rise in spite of major Pattern Resistance and the lead indicators being OVERBOUGHT. This certainly has a danger of getting the retail / small investor getting trapped on the wrong side of trade if one continues to get carried away felling left out from the rally.

It is strongly advised at these levels to avoid direct long positions in NIFTY and NIFTY Components until we see some correction / consolidation on a serious note as this is now getting hazardous. It is rather advised to concentrate on stock specific opportunity while protecting profit at higher levels. High degree of caution is advised for today.