Gemstone Equity Research & Advisory Services

Thursday, August 21, 2014

Daily Market Trend Guide -- Thursday, August 21, 2014

MARKET REPORT August 21, 2014

The Markets took a breather yesterday after five days of gains on expected lines and consolidate at higher levels to end the day with modest losses. The Markets opened on a mildly positive note and immediately formed its day’s high of 7922.70 in the early minutes of the trade. Thereafter, it slipped into the red to trade with minor losses. For the entire session, the Markets traded more or less in sideways trajectory of 25-odd points and never really broke down or saw any upward spikes. The Markets spent the entire session in this manner trading sideways with capped losses while it made its day’s low of 7864.05 towards the end. It finally ended the day at 7875.30, posting a net loss of 22.20 points or 0.28% while forming a mildly higher top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR TODAY

Today as well, we can fairly expect the Markets to open on a quiet note and look for directions in the initial trade. There are chances that the Markets continue to consolidate and even see mild correction from higher levels in case of an up move. There would be likely shift in the sectoral performance and the Markets are likely to remain in overall pattern formation.

For today, the levels of 7920 and 7945 would act as resistance on the Daily Charts. The supports come in at 7810 and 7765 levels.

The RSI—Relative Strength Index on the Daily Chart is 61.7395 and it remains neutral showing no bullish or bearish divergences or any failure swings. The Daily MACD remains bullish trading above its signal line.

On the derivative front, NIFTY August futures have shed nearly 1.58 lakh shares or 1.04% in total open interest. This signifies that there has been some profit taking that has been observed from higher levels yesterday.

Going by the pattern analysis, the Markets remaining in the overall formation that we have been discussing in previous editions. Further, there has been additional formation of a trend line within the original formation and the Markets may find pattern resistance there as well. Given this, there are fewer chances that the Markets may see a run-away rise without showing any consolidation at these levels. If it happens, then the sustainability would be under question.

Overall, the Markets are likely to remain in consolidation mode and show some jerks on both side and the session may remain ingrained with some moderate amount of volatility. Sectoral and stock specific out performance would continue. Given this reading, cautious outlook is advised for today.

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, August 20, 2014

Daily Market Trend Guide -- Wednesday, August 20, 2014

MARKET REPORT August 20, 2014

Though the Markets had a volatile and range bound session yesterday, it continued to scale fresh lifetime highs and continued to end with modest gains in a fifth day in a row. The Markets opened on a positive note and formed its fresh lifetime high of 7918.55 in the early minutes of the trade. It came of a bit thereafter but never did it go into negative territory. The Markets spent the entire session in a sideways trajectory and kept advancing and declining in a 30-odd points range. It did not break this trajectory for the entire session. Towards the end it did so some recovery and paring of the same for couple of times and finally ended the day at 7897.50, posting a net gain of 23.25 points or 0.30% while continuing to form a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TODAY

After relentless up move of nearly 275+ points on the NIFTY, the Markets are expected to take some breather today. Expect the Markets to open on a quiet and mildly negative note and look for directions. The Markets have tested the upper trend line of the broadening formation and it is expected to consolidate around these levels, at least technically speaking. The intraday trajectory and the volumes at higher levels would continue to throw important cues for the coming sessions.

For today, the Markets the levels of 7920 and 7945 would act as immediate resistance for the Markets. The supports would come in at 7860 and 7825 levels.

The RSI—Relative Strength Index on the Daily Chart is 63.63 and it does not show any failure swings. However, the NIFTY has formed a fresh 14-period high whereas the RSI has not yet and this is bearish divergence. The Daily MACD continues to trade above its signal line and is bullish.

On the derivative front, the NIFTY August futures have added yet another over 1.93 lakh shares or 1.29% in Open Interest. This implies continuation of building of fresh long positions in the yesterday’s session.

Checking on the pattern analysis, the Markets have pulled back nearly 30-odd points after nearly approaching its 50-DMA on the Close charts. While it did so, it was in a Broadening Formation and even today it continues to remain in this formation. However, given the current levels it has tested its upper trend line of such formation and normally, technically speaking, the any Market would either correct or consolidate around these levels. Usually, depending upon the participation, i.e. volumes the Markets would either consolidate or correct or at least briefly halt its advance.

Given the above reading, the strategy for the Markets should be more or less on similar lines like yesterday. Purchases may be made, though selectively but such long positions and profits should be very vigilantly protected at higher levels. If not today, then in coming sessions, there is all likelihood that one gets trapped in the distribution selling that happens at higher levels. Overall optimistic approach but with very high degree of caution is advised for today.