Daily Market Trend Guide -- Wednesday, November 23, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY                                                   Wednesday, November 23, 2011

Even though the Markets were oversold, the yesterday’s session remained much volatile as global cues weighed more and the Markets moved in very volatile range showing lack of conviction and finally ended the day at 4812.35, up by just 34 points or  0.71% and in the process formed a lower top but higher bottom on the Daily High Low Charts.

For today, again expect the Markets to open on a lower note and look for directions. In case of lower opening, it would be critically important for the Markets to trade above 4775-4780 levels, and in worse case do not breach the 4720 levels which is the very critical filter support of the triple bottom support of 4770-4780 levels.

For today, the levels of 4770 and 4720 shall act as supports and the levels of 4855 and 4890 shall act as resistance on the higher side. The RSI—Relative Strength Index on the Daily Chart is 32.6370 and it has just moved out of the Oversold territory which is Bullish. It is neutral as it shows no failure swings or negative divergence. The Daily MACD continues to trade below its signal line.

It is important to note that today is the penultimate day of the expiry of the current derivative series and thus, the session is also likely to remain dominated with rollover centric activities. Further important to note that cost of carry for December contracts as fallen, widening the discount or decreasing the premium which very clearly signifies that lots of shorts are being rolled over into the next month. Further, any weakness on the Close charts will again make the Markets OVERSOLD. Thus, it is very strong likelihood that we may see a spate of short covering again at lower levels. 

This is  clearly a market not to sell. The investors are advised to utilize this opportunity to make very selective purchases. The shorts should be strictly avoided as short covering may not be ruled out due to reasons enumerated above. The volatility is likely to stay, due to both global factors as well as ongoing rollovers. However, shorts may be avoided. The intraday trajectory would continue to remain important. Overall, faintly positive but cautious outlook is advised for the day.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
http://milan-vaishnav.blogspot.com
+91-98250-16331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

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