Gemstone Equity Research & Advisory Services

Tuesday, June 14, 2016

Daily Market Trend Guide -- Tuesday, June 14, 2016

MARKET TREND FOR TUESDAY, JUNE 14, 2016

While trading very much on expected lines, the Markets yesterday recovered some 50-odd points from the low point of the day but still ended the day with losses. Today, we can once again expect the Markets to open on a modestly negative note and look for directions but the yesterday’s low level of 8063 is likely to hold as support. Though the Markets are expected to continue to remain in corrective mode, it is more likely to remain range bound as well.

For today, the levels of 8130 and 8175 will act as immediate resistance levels for the Markets. The supports come in at 8060 and 8010 levels.

The RSI—Relative Strength Index on the Daily Chart is 55.7400 and it has just reached its lowest value in last 14-days which is bearish. The RSI has set a fresh 14-period low while NIFTY has not yet and this is bearish divergence. The MACD too has reported a negative crossover and it is now bearish as it trades below its signal line. On the Candles, a falling window (gap) has occurred. This occurring with the previous two candles also being black, makes charts little weaker.

On the derivative front, the NIFTY June futures have shed over 7.28 lakh shares or 3.39% in Open Interest. The NIFTY PCR stands at 1.11 as against 1.12.

Coming to pattern analysis, the Markets are now showing signs of correction after a stupendous 450+ points of up move. After making an immediate top at 8294, the Markets have shown some corrective tendency. If we draw a trend line from the lows it made in February, the Markets may see some 50-100-odd points of modest downsides left before it attempts of find foot again. With this, the levels of 8000 may be important to watch out for. If the current levels are breached, then the Markets testing the 50-DMA cannot be ruled out.

Overall, in the scenario described above, in any case, there will be no structural breach on the Charts even if the Markets tests its critical supports mentioned above. It would be a healthy correction and most of the dips will be bought into. We continue to reiterate to use all upsides until the levels of 8294 to book and protect current profits. Shorts should be avoided but as the Markets are likely to continue to see a range bound consolidation and movements.

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

Monday, June 13, 2016

Daily Market Trend Guide -- Monday, June 13, 2016

MARKET TREND FOR MONDAY, JUNE 13, 2016

Markets swung nearly 80-odd points either side on Friday or ended the day with modest losses. Today, we can expect the Markets to open once again on a lower note. News factors like weak IIP numbers, terror attack in the US, etc., can weigh on the Markets but speaking purely on technical grounds, the Markets are currently under healthy mode of correction and this corrective mode is likely to persist today as well.

For today, the levels of 8205 and 8270 are immediate resistance levels for the Markets. The supports come in at 8130 and 8080 levels.

The RSI—Relative Strength Index on the Daily Chart is 61.1927 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD stays bullish as it trades above its signal line. On the Candles, an upper rising shadow has occurred and this remains a potentially short term bearish candle, though it requires confirmation. On the Weekly Charts, the Weekly RSI is 59.5668 and this too remains neutral as it shows no bullish or bearish divergence or any failure swing. The Weekly MACD stays bullish as it trades above its signal line.

On the derivative front, the NIFTY June futures have shed 21,000 shares or nominal 0.10% in Open Interest. This has kept OI virtually unchanged and we can fairly say that that has been no major selling / unwinding of positions that was visible on Friday.

Coming to pattern analysis, the Markets have started to show some signs of weariness after its sharp up move of over 400-odd points after breaking out of a triangle formation. So far as current behavior of the Markets is concerned, it has been consolidating after forming a immediate top at 8294 levels. The current consolidation that the Market is witnessing has been in fact healthy for the Markets after the kind of rise that it has witnessed. Today, with the type of gap down opening that is expected, the Markets may test its immediate support levels and see some stability returning from lower levels.

Overall, there are very high chances that the dips get bought into and therefore the Markets see some buying emerging from lower levels. It is advised to use such dips to accumulate quality stocks and therefore selective purchases may be made at lower levels. Overall, though the Markets may remain volatile as it expects lots of news flow this month buy any structural breach on the Charts is not likely. Cautious outlook is advised for today.