Gemstone Equity Research & Advisory Services

Thursday, May 19, 2016

Daily Market Trend Guide -- Thursday, May 19, 2016

MARKET TREND FOR THURSDAY, MAY 19, 2016

Markets continued to consolidate and continued to seek support at its 200-DMA and managed to keep its head above it yesterday. Today, the Markets are likely to see a negative opening once again and the analysis would continue to remain once again on similar lines like yesterday. The Markets continue to remain in symmetrical triangle formation and moving towards its apex and this is likely to see either trading range remaining extremely capped or Markets finally taking a directional call for the immediate short term.

For today, the levels of 7890 and 7935 will act as immediate resistance levels for the Markets. The supports come in at 7805 and then at 7740 levels.

The RSI—Relative Strength Index on the Daily Chart is 55.59 and it remains neutral as it shows no bullish or bearish divergence. The Daily MACD stays bearish as it trades below its signal line.

On the derivative front, the NIFTY May futures have shed yet another 5.12 lakh shares or 3.09% in Open Interest. The NIFTY PCR stands at 0.99 as against 0.96 yesterday.

Coming to pattern analysis, the Markets have continued to remain in symmetrical triangle formation. Further to this, it is under this formation for quite a time now and has moved more towards apex. Usually, if a breakout on either side is not achieve around 75% distance from apex, the intensity or effectiveness of the breakout reduces by nearly a high and this has adverse effects, especially on the upside breakouts. Having said this, the RSI too remains under such formation and has not formed a higher high as well. Overall, there are chances that the Markets may see some short term weakness coming in. In any case, the upside will continue to face stiff resistance around 7970-7990 zones.

Overall, the Markets will have to watch itself vis-à-vis the levels of 200-DMA which stands at 7805 today. Any breach below this will see some more weakness creeping in. It is also important to note that the Markets are overdue to take a directional call and volatility on either side cannot be ruled out. While continuing to keep analysis on yesterday’s line, making moderate purchases while vigilantly guarding profits at higher levels is advised for today.

Milan Vaishnav,

Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA
Member: Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com

Wednesday, May 18, 2016

Daily Market Trend Guide -- Wednesday, May 18, 2016

MARKET TREND FOR WEDNESDAY, MAY 18, 2016

Markets are likely to see a modestly negative opening once again and look for directions. The fact that the Markets continue to remain in the symmetrical triangle formation keep the analysis for today once again on similar lines that of yesterday. On the upside, the Markets continue to face stiff pattern resistance in the 7970-7990 zones and on the downside, its behavior vis-à-vis the levels of 200-DMA will be critical to watch out for.

For today, the levels of 7915 and 7940 will act as immediate resistance levels for the Markets. The supports come in at 7808 and 7750 levels.

The RSI—Relative Strength Index on the Daily Chart is 57.31 and it remains neutral as it shows no bullish or bearish divergence or failure swing. The Daily MACD stays bearish as it trades below its signal line.

On the derivative front, the NIFTY May futures have added over 4.05 lakh shares or 2.50% in Open Interest. The NIFTY PCR stands at 0.96 as against 0.92 yesterday.

Coming to pattern analysis, the Markets continue to remain in a stiff range while forming a symmetrical triangle on the Daily Charts. The movement of the Markets has narrowed wit it facing stiff resistance in the 7800-7950 zones and the levels of 200-DMA which is 7808 today has been acting as support for the Markets. Though the Markets currently lacks a clear directional bias, the upsides will remain capped at 7970-7990 zones as these level offer very stiff pattern resistance for the Markets. On the downside, any breach below the 200-DMA will see the Markets getting weaker in the immediate short term.

Overall, even if the medium term view of the Markets may remain bullish, the Markets lack directional bias in the immediate short term. It is important to note that no sustainable up moves shall occur until the Markets comprehensively move past 7970-7990 resistance zones. Until this happens we continue to reiterate to use every up move to book and protect existing profits.