Gemstone Equity Research & Advisory Services

Monday, December 1, 2014

Daily Market Trend Guide -- Tuesday, December 02, 2014

MARKET REPORT December 01, 2014

The Markets halted its three-day gaining streak as caution reigned in ahead of RBI Credit Policy tomorrow. The Markets saw positive opening and after trading flat in the initial trade, strengthened further to post the day’s high of 8623 in the late morning trade. However, it retreated in the remaining part of the session. After posting this fresh lifetime high, the Markets saw slow paring of gains in the first half of the session. It traded flat by afternoon as it pared all of its morning gains. The late afternoon trade saw some pressure coming in, as such on expected lines, as the Markets dipped into the negative. It weakened further as it went on to form the day’s low of 8545.15. It came off nearly 80-odd points from the high point of the day and finally settled at 8555.90, posting a net loss of 32.35 points or 0.38% while continuing to form higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, DECEMBER 02, 2014

The Markets continue to remain at critical juncture. We can expect a flat opening tomorrow and may trade in a capped range ahead of RBI Announcements and react to it after that. As such no rate cuts are expected but it would be technically important for the Markets to trade above 8540 levels. If it dips below this, it may induce some short term weakness in the Markets.

The levels of 8600 and 8630 would act as immediate resistance. The supports come in at 8540 and further down at 8430 levels.

The RSI—Relative Strength Index on the Daily Chart is 69.6175. It has moved below from topping formation and this is bearish. It otherwise remains neutral with no failure swings or any bullish or bearish divergence. The Daily MACD continues to trade above it signal line.

On the derivative front, the NIFTY December futures have shed over 2.69 lakh shares or 1.21% in Open Interest. This signifies some unwinding of long positions from higher levels.

Going by the pattern analysis, the Markets have taken a very immediate support on the rising trend line that it attempted to break on the upside. However, any dip below the levels of 8540 is likely to induce some immediate weakness in the Markets. The lead indicators, read along with F&O data show some tilt towards this situation.

Overall, we continue to reiterate caution in the Markets. Given the current state of Technical Charts, its lead indicators, derivative data, it would be absolutely wise to concentrate on protecting current profits. While keeping purchases very limited and highly selective, liquidity should be maintained as selling bouts and minor but sharp cannot be ruled out even if we have the overall trend intact.

Milan Vaishnav,

Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Sunday, November 30, 2014

Daily Market Trend Guide -- Monday, December 01, 2014

MARKET REPORT November 28, 2014

Markets on Friday continued to surge ahead attempting a fresh breakout once again as it opened positive, strengthened further and ended the day with decent gains. The Markets saw a positive opening and after this, went on to post new highs gradually. It formed its intraday high of 8617 in the late morning trade. The afternoon session saw the Markets maintaining those gains in a steadfast manner. Going ahead in the afternoon session, some minor paring of gains was maintained as the Markets saw a minor retreat from intraday highs. However, not much of the gains were pared and the Markets finally ended the day at 8588.25, posting a net gain of 94.05 points or 1.11% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, DECEMBER 01, 2014

The Markets have once again attempted a breakout on the upside but not trade overbought again. Expect the Markets to open on a quiet note and also expect it to trade mildly positive in the initial trade. However, given the technical structure, some amount of profit taking from higher levels just cannot be ruled out as the current up move is fuelled by liquidity.

The levels of 8620 and 8645 would act as immediate resistance for the Markets. The supports would come in at 8510 and 8460 levels.

The RSI—Relative Strength Index on the Daily Chart is 73.6449 and it shows no failure swing. However, it trades in “overbought” area and also shows Bearish Divergence as the RSI has not posted a fresh 14-period high whereas the NIFTY has. The Daily MACD trades bullish above its signal line. On the Weekly Charts, the Weekly RSI is 74.9885. It is bullish as it has reached its highest value but it also trades in “overbought” area. The Weekly MACD is bullish but this too now is “overbought”.

On the derivative front, the NIFTY December futures have added yet another over 12.75 lakh shares or 6.09% in Open Interest. This clearly shows that there has been addition of fresh longs in the system .

Coming to the pattern analysis, the Markets are now trading at a major pattern resistance levels on the Weekly Charts. The Markets can face stiff resistance near 8600-8630 range. The Markets may move past these levels driven by liquidity but this would be extremely unhealthy for the Markets, at least technically speaking. There are strong chances that the Markets face resistance some selling bouts, though intermittently, at higher levels. The Markets are overbought on Daily Chart and on the Weekly Charts as well.

Given this technical reading, there are strong chances that we might see intermittent selling bouts even if the Markets continue to remain fuelled by liquidity. It would be of extreme importance that one keeps protecting profits at higher levels. Up moves, with this structure of the Charts, cannot be taken for granted and therefore fresh positions should be taken with extremely caution and on highly selective basis.