Daily Market Trend Guide -- Tuesday, November 22, 2011 (Published in the morning before the Markets opened)

November  22,  2011 

MARKET TREND FOR TODAY

The Markets continued its total defiance to the technicals as it continued to move in a “structured” way and ended yet another session in red. The Markets opened continued to maintain its “daiy structured routine” as it opened on a gap down note of 50-odd points and then spent more than half of the session going nowhere and moved in just 18-odd points range until afternoon. After that, keeping with its intraday trajectory of past eight sessions, the Markets begin its downward journey as it went on to shed weight fast and ended the day at 4778.35, taking a deep cut of 127.45 points or 2.60%.

As seen on the above Daily Chart of NIFTY, the Markets have come down completely ignoring the 100-DMA and the 50-DMA which is completely unnatural and is against any established technical pattern as these two are important supports / resistances that the Markets usually recognizes under normal circumstances.  Having said this, the RSI—Relative Strength Index on the Daily Chart is 29.5980 and is in  OVERSOLD territory. Though it has reached its lowest value in last 14-days, it does not show any negative / bearish divergence. The Daily MACD continues to trade below its signal line.

Further, as seen in the Charts, the Markets now again rests as one of the most important support levels in form of 4780 levels with the filters until 4730 levels. It would be critically important for the Markets to take support at these levels.

For today, we may expect the Markets to open on a moderately positive note and continue to critically depend upon the intraday trajectory. Going strictly by technical observations, there are chances of a technical pullback to occur as the Markets now trades in OVERSOLD zone. The Markets have shed 511 points  or 10.08 in last eight sessions, and so, it sees a fair technical gap of technical pullback worth 160-odd points. It should be noted that this technical reading holds good only if the Markets are free of any artificial controlled movements.

Under such “controlled and structured” movements in the Markets, the retail investor bears the maximum burnt. No technical buy signal holds in such  conditions and upon shorting, there are big chances that he gets trapped in the heavy short covering which cannot be ruled out any time in such conditions.

We  continue to advise that it is best to avoid shorts at these levels as short covering at any time just cannot be ruled out. Fresh purchases may be made, but only selectively and partially. Overall, with expectation of a pullback, cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-98250-16331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

Daily Market Trend Guide -- Monday, November 21, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets ended its seventh consecutive session in the red as it ended the Friday’s session with losses. Though it saw a very sharp and strong short covering from its day’s lows but still continued to form a lower top and lower bottom on the Daily High Low Charts.

For today, we can expect a subdued opening again in the Markets. Technically speaking, since the Markets have ended the day near the high point of the day of Friday post short covering, it is  technically supposed to continue the up move and its recovery. But global weakness is all likely to weigh it down again and thus give a subdued opening in the Markets.

With such subdued opening expected, once again, like Friday, the intraday trajectory would continue to play critically dominant role in dictating the trend. For today, the levels of 4850 and 5820 shall continue to act as supports and the levels of 4940 and 4985 shall act as supports.

The RSI—Relative Strength Index on the Daily Charts is 35.1115 and it has reached its lowest value in last 14-days which is bearish. However, it does not show and negative / bearish divergence. The Daily MACD continues to trade below its signal line.

On the Weekly Charts, the RSI is 41.2853 and it shows no negative divergence or failure swing and is neutral. The Weekly MACD continues to remain positive as it trades above its signal line.

On the Candles on the Daily Charts, A long lower shadow occurred. This is typically a bullish signal if it occurs near low price level or a support level. Further to this, this is expiry week and the session will remain dominated with rollover centric activities. As said above, the Markets have lost 383.55 points of 7.48% in straight seven sessions. Given all this there are chances that we open negative but may see discomfort at lower levels. Spikes are expected in form of short covering. The volatility is likely to stay. Given all this, there are chances that one sees a short trap at lower levels. It is advised to continue to avoid aggressive positions, avoid shorts and adopt cautious, but mildly positive outlook for the day.

 

Milan Vaishnav, 

Consulting Technical Analyst, 

www.MyMoneyPlant.co.in

+91-9825016331 

milanvaishnav@mymoneyplant.co.in 

milanvaishnav@yahoo.com