Gemstone Equity Research & Advisory Services

Monday, April 30, 2012

Daily Market Trend Guide -- Monday, April 30, 2012

MARKET TREND FOR TODAY April 30, 2012

The Markets had a quiet and positively biased short session on Saturday as it ended the day with modest gains. The Markets opened positive and traded positive in a capped range for the most part of the short trading session. However, towards the end, it moved up further to give the day’s high of 5216.40 and finally ended the day at 5209, posting a modest gain of 18.40 points or 0.35%. With this it has formed a similar top and higher bottom on the Daily High Low Charts. The Markets have ended the week with net loss of 81.85 points or 1.54%.

For today, expect the Markets to open on a mildly positive note and continue with its attempt of up move. The Markets may open and trade positive at least in the initial session however the intraday trajectory that it forms during the day would continue to be important as the Markets still continues to remain in overall range.

For today, the levels of 5245 and 5290 shall act as resistance and the levels of 5130 and 5125 shall be very important supports at Close levels.

The lead indicators throw a contradictory signals on Daily and Weekly Charts. The RSI—Relative Strength Index on the Daily Chart is 45.6526 and is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to remain bearish as it trades below its signal line. On the Weekly Charts the RSI is 50.0578 and it has reached its lowest value in last 14-weeks which is bearish. Also, the RSI has give its 14-period low but NIFTY has not and this is Bearish Divergence.

Coming back to the Daily Charts, the lower DMA (100) has reported a Positive Crossover as it has cut a larger DMA (200) from below and this indicators upward momentum in the short term.

Given this contradictory reading on Daily and Weekly Charts and the Pattern Analysis on the Daily Charts, the Markets are expected to see sharp movement on either side this week. However, given the very low F&O Open Positions and Markets trading above its 100-200 DMA, the downside still appears limited until Markets breaches these levels on the downside.

All and all, the volatility and the capped trade in the Markets cannot be ruled out. As we had mentioned in one of our previous editions of the Daily Market Trend Guide, the Markets have not given directional signals on either side and this will keep it in a broad range and volatile without going in any direction with conviction. It is advised to refrain from shorts and avoid aggressive positions. Also it is strongly recommended to keep protecting profits very vigilantly at higher levels. Overall, 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

Friday, April 27, 2012

Daily Market Trend Guide -- Friday, April 27, 2012

MARKET TREND FOR TODAY April 27, 2012

The April Series ended on a very muted note as the Markets spent the entire session in a extremely narrow band of 20-odd points and ended the day with moderate losses. The Markets opened on a mildly positive note and gave its intraday high of 5215.60 in the very early session of the trade. It slipped into the red after briefly trading positive and thereafter spent most of the session in a very narrow range. It slipped a bit towards the end to form day’s low of 5179.05 but finally ended the day at 5189, posting a moderate loss of 13 points or 0.25%. In the process, it has formed a lower top but higher bottom on the Daily High Low Charts.

Today, expect the Markets to open on a flat to moderately positive note and look for directions. Given flat opening expected, the intraday trajectory would be critically important as the Markets hovers around two most critical support levels.

For today, the levels of 5254 and 5280 are immediate resistance levels on the Charts, and the levels of 5128 and 5130 are important support levels in the form of 100DMA and 200DMA respective at Close levels.

The RSI—Relative Strength Index on the Daily Chart is 43.6062 and it has reached its lowest value in last 14-days which is bearish. However, it shows no negative divergence. The MACD on the Daily Charts to continues to trade below its signal line. On the Weekly Charts too, the RSI, at 49.3832 is bearish as it has give its 14-week low, but shows no negative divergence. The Weekly MACD remains bullish as it trades above its signal line.

Given this, it is very important to note that the overall Open Positions at the beginning of this series is one of its all time lows as it has started very light and low. Within these very less overall open positions here are majority of shorts which have been rolled over as the NIFTY has added over 33 lakh shares in Open Interest.

Further to this, if we go with Pattern Analysis along with the above statistical reading, the lower DMA is in the process of giving a positive crossover but cutting the larger DMA from below, as evident from the Charts. Further to this, two important supports in the form of 100 DMA and 200 DMA exists in very near range. Given all this ,the Markets shows a very limited down side.

All and all, range bound trade and the consolidation will continue. We may continue to see a range bound and as a result volatile trade but given the very low base of open positions, sharp movement on the either side cannot ruled out but the bias remains positive due to reasons enumerated above. IT is strongly advised to refrain from aggressive positions until the Markets gets directional momentum and also to avoid shorts. Any weakness may be utilized to make selective purchases. On the other hand, profits should continued to be protected. Overall, cautiously positive outlook is advised for today.