Daily Market Trend Guide -- Wednesday, August 12, 2015

MARKET REPORT                                                                          August 12, 2015

The Markets continued to wear a bearish undertone and continued to correct very much on expected lines while ending yet another day with losses while testing its 200-DMA. The Markets saw a modestly negative opening and never nearly traded positive throughout the day. After opening on modestly negative note the Markets traded with capped gains and trended sideways in the morning trade. It was the afternoon trade which saw some significant weakness creeping in. The Markets transformed itself into falling downward sloping trajectory and kept forming gradual lows. It went on to form the day’s low at 8441.30 in the late afternoon trade. The Markets attempted to take support at its 200-DMA and some minor recovery was seen after that. The Markets finally ended the day at 8462.35, posting a net loss of 63.25 points or 0.74% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, AUGUST 12, 2015

Markets face a critically important session today. Expect the Markets to open on a negative note today, probably below its 200-DMA levels. These levels would be critical to watch out for. It would be crucially important to see if the Markets attempt to take support at these levels at Close and improve as the session progresses. If it does not happen, then we are probably heading for much weaker days ahead. Reason being, even if we keep aside fundamental development such as devaluation of Yuan, the Markets is anyway getting structurally weaker.

For today, the levels of 8510 and 8550 will act as immediate resistance for the Markets. The supports come in at 8450 and 8390 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.7573 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD is bearish as it trades below its signal line after reporting negative crossover yesterday.

On the derivative front, the NIFTY August futures have shed over 36,000 shares in or just 0.22% in Open Interest. This is negligible figure and does not signify any major unwinding of positions.

Coming to pattern analysis, the Markets have not only resisted to the upward rising pattern resistance drawn from 8000-levels, it is also forming a potentially bearish Head and Shoulders formation. This formation is not classical but little vague but it is still valid. However, the silver lining is, that just below the possible neckline, there are three DMAs, i.e. 200-DMA, 100-DMA and 50-DMA respectively. These increase the chances of the Markets to take support at these levels respectively s they appear. However, if the Markets breach the neckline, then the measuring implication of this pattern will make the Markets see some more downsides in coming sessions.

Overall, the Markets are getting technically weaker each passing day. The longer the Markets remain in this structure without any pullback, the weaker it will get. It would be very important for the Markets to saw a sharp pullback in coming days and make the potentially bearish H&S pattern invalid. However, now, with each dip, chances of some more weakness creeping in will increase. Keeping this in view, it is advised to refrain from taking fresh positions and maintain liquidity and strong caution in the Markets.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

Consultant to:
www.MyMoneyPlant.co.in
+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com

Daily Market Trend Guide -- Tuesday, August 11, 2015

MARKET REPORT                                                                                August 11, 2015

The Markets continued to remain haunted by consolidating activities as it resisted very near to the levels mentioned in our yesterday’s edition of Daily Market Trend Guide and ended the day with losses after a very volatile trade. The Markets saw a resilient opening on a positive note and strengthened further in the morning trade to form the day’s high of 8621.55. The Markets maintained these gains for the major part of the session as it then traded in very capped and narrow range while trending sideways. Just when it seemed that the Markets may retain the psychologically important 8600-mark, it saw a near vertical correction in the last hour of the trade. The Markets saw a vertical paring of gains and it came off nearly 125-odd points from the high point of the day to form the day’s low of 8497.80. Minor recovery was seen and the Markets finally ended the day at 8525.60, posting a net loss of 39 points or 0.46% while forming a higher top but lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, AUGUST 11,, 2015

As very clearly evident from the Daily Charts, the Markets are troubled by a classical pattern resistance drawn from the lows of 8000-levels it formed in June. Today as well, we can expect the Markets to open on a modestly positive note but continue to remain in the consolidation zone for some more time. The Markets will grossly depend upon the intraday trajectory that it forms post opening and would continue to resist to the upward rising pattern resistance levels.

Today, the levels of 8575 and 8620 will act as immediate resistance levels. The supports come in at 8500 and 8440 levels.

The RSI—Relative Strength Index on the Daily Chart is 53.5338 and it remains neutral as it shows no bullish or bearish divergence or failure swings. The Daily MACD has reported a negative crossover and is now bearish as it trades below its signal line.

On the derivative front, the NIFTY August futures have shed over 2.48 lakh shares or 1.47% in Open Interest and this signifies some shedding and unwinding of positions in the NIFTY.

Coming to pattern analysis, the Markets have continued to vehemently resist to the rising trend line of the channel drawn from 8000-levels it formed in June. Following this as we have often mentioned in our previous editions of Daily Market Trend Guide that since the trend line keeps rising, the levels required for the Markets to have a upward breakout too keeps rising. This prevents the Markets from the clear breakout and it continues to resist to the upward rising pattern resistance even if it continues to post gains. Further to this, though the Markets have three major supports on the downsides in form of all three moving averages, it is forming a potential Head and Shoulder formation which is potentially bearish. However, positive speaking, the volume tests required for this is missing and the three major support levels should prevent it from happening.

Overall, the Markets are in a very critical juncture and they are likely to continue to remain volatile and prone to profit taking bouts just like yesterday. Given this scenario, it would also see some good amount of volatility ingrained in it. More emphasis should be laid on protecting profits than taking new positions. With no clear directional bias as of now, cautious approach with enough liquidity should be maintained.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

Consultant to:
www.MyMoneyPlant.co.in
+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com