Gemstone Equity Research & Advisory Services

Thursday, February 9, 2012

Daily Market Trend Guide -- Thursday, February 09, 2012

MARKET TREND FOR TODAY February 09, 2012

The Markets continued to rise on liquidity while remaining heavily “overbought” and continued to end the day with modest gains after a very volatile session. The opened on a flat note and after briefly trading in a capped range, went on to give intraday high of 5396.90. However, post this high, in the second half of the session, the Markets saw a sudden paring of gains as it saw a bout of profit taking and went on to briefly trade into the negative territory. However, again, as it has been happening over past couple of sessions, the Markets saw a sharp recovery from its lows and finally ended the day at 5368.15 posting yet another modest gain of 33 points or 0.62%. In the process, it has formed a Parallel Bar, i.e. almost similar top and bottom on the Daily High Low Charts.

For today, expect the Markets to open on a moderately negative note and trade in negative at least in the initial trade and look for directions. Some indications of weariness have started creeping in as evident from yesterday’s volatile intra day behaviour and this is likely to weigh in a bit today, following void in any concrete development in the Greece Debt matter, especially when the technicals remain very “overbought”.

For today, the levels of 5400-5410 shall continue to act as resistance and immediate top until the time it is breached with the supports coming in as low as 5290 and 5210.The technicals continue to remain “overbought”.

The RSI—Relative Strength Index on the Daily Chart is 73.4303 and it continues to remain in “overbought” range. The NIFTY again reported its 14-day high but RSI has not and this is “Bearish Divergence”. The Daily MACD continues to remain above its signal line.

All and all, the analysis for to day again remains more or less as that of yesterday. Some signs of individual corrective activities (stock specific) are seen today also, we can expect such trend to continue with bias towards some correction, which is long overdue and the absence of which is making the Markets unhealthy and dangerous. There are chances that volatility may remain and we may see some sharp profit taking bouts as seen yesterday. However, it should be noted that large cash flows and with the Markets being in “overbought” range, it also increases the sharp speculative movements triggered by few large players in the Markets. We continue to reiterate to avoid any significant and aggressive positions in the Markets as they continue to remain “overbought” and exercise high degree of caution 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

Wednesday, February 8, 2012

Daily Market Trend Guide -- Wednesday, February 08, 2012

MARKET TREND FOR TODAY February 8, 2012

The Markets did show some signs of weariness today as it ended the day with modest losses after a volatile session. The Markets opened on a positive note on global cues and gave its intraday high of 5413.35 in the early seconds of the trade. It however spent the first half of the session in a capped range with limited gains. It dipped into the red in the final leg of the session to give its day’s low of 5322.95. It hovered around those levels until the end of the session and ended the day at 5335.15, posting a modest loss of 26.50 points or 0.49%. It the process, it has formed a higher top but lower bottom on the Daily High Low charts.

For today, expect the Markets to open flat to mildly positive again and look for directions. The consolidation is overall likely to continue as the level of 5400-5410 as a pattern resistance in form of Double Top continues to act as immediate top for the Markets.

Having said this, the levels of 5390 and 5410 are likely to act as resistance today and the levels of 5290 and 5230 may act as supports.

The RSI—Relative Strength Index on the Daily Chart is 72.0100 and it continues to remain in “overbought” and is neutral as it does not show any negative divergence or failure swing. The Daily MACD continues to trade above its signal line. On the Candles, A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are "high," it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trend line, or price resistance level), the long black candle adds credibility to the resistance.

The Markets did react to the possibility of slowdown in GDP growth on expected lines. The indications for a consolidation / correction were seen in the broader markets yesterday. Today also, in the second half of the session, we may also see the Markets reacting to the European markets as action on Greek debt may come today. Discussing all this external factors, the bottom line is that the technicals clearly indicates continuation of consolidation / corrective phase in the Markets. The levels of 5400-5410 has become an immediate top and with the Markets remaining in “Overbought” range, no sustainable rally shall occur until the Markets moves past these levels and also at the same time, ceases to be in “overbought” territory.

All and all, continuation of cautious outlook is advised for today. Very selective stock specific purchases may be made but profits too should continued to be protected on either side. Overall, high degree of caution is advised for today.