Gemstone Equity Research & Advisory Services

Friday, October 21, 2011

Daily Market Trend Guide -- Friday, October 21, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets had a terribly volatile session yesterday as it ended the day with relatively moderate losses after opening weak, dipping further and thereafter recovering from its day’s lows. However, it still formed a lower top and lower bottom on the Daily High Low charts.

Technically speaking, even though the Markets have ended the day with losses, it has closed near the high point of the day and it is usually expected to continue with its recovery.

For today, expect the Markets to open on a moderately positive note and look for directions. Today, the intraday trajectory that the Markets form would be critically important as some stability is again expected to return in the markets. This will be due to some favorable technicals and also as the US Markets too recovered from its day’s low and Asian Markets are trading stable.

For today, the levels of 5145 and 5170 continue to act as resistance levels and the levels of 5050 and 5005 are expected to act as supports.

The RSI—Relative Strength Index on the Daily Chart is 54.0067 and it shows no negative divergence or failure swing and is therefore neutral.

The Daily MACD continued to trade above its signal line and is therefore bullish.

Though NIFTY has shedding Open Interest in current series, two important things to observed that we have been witnessing short covering near the 50DMA levels. This shows discomfort near those levels for further downside. Also, since the Markets are currently trading above its 50 DMA it can certainly be said that it is now attempting a reversal of trend and thus has an upside bias.

All and all, moderately positive opening and stability is expected in the Markets today. Stock specific activity and some amount of rollovers are expected to begin and seen. While protecting profits and avoiding shorts, overall, positively cautious approach is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

Thursday, October 20, 2011

Daily Market Trend Guide -- Thursday, October 20, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets had a strong session yesterday as it opened on a positive note and went on to remain in upward rising trajectory to finally end the day with decent gains and in the process formed a sharply higher top and higher bottom on the Daily High Low charts.

For today, expect the Markets to open again on a moderately lower note and look for directions and since it is expected to open subdued, the intraday trajectory that it forms after opening would be critically important. For today, expect the Markets to open on a subdued note and in the process, the levels of 5110 and 5075 are expected to act as supports on the lower side.

The Markets have continued to trade within the broad trading range it has been trading in since August and thus, likely to remain so for couple of sessions.

The RSI—Relative Strength Index on the Daily Chart is 56.9107 and it does not show any failure swing. However, NIFTY has set a new 14-day high but RSI has not and this is Bearish Divergence. The Daily MACD continues to remain bullish as it trades above its signal line. On the Candles, A Rising Window occurred. This usually implies continuation of bullish trend it makes the pattern more bullish.

Having said this, there are two important things to note. Yesterday’s rise has come more out of short covering as NIFTY Futures have reported shedding of open interest with the rise and secondly, the Markets are yet to move past the levels of 5170 which is required to break out of the broad trading range it has been trading in. As mentioned number of times in the past issues of Daily Market Trend Guide, the Markets need to move past the levels of 5170 for fresh and sustainable up move. So, until this happens, we are likely to see some consolidation again. It is necessary that the short covering is replaced by fresh longs. While avoiding shorts, stock specific approach is advised as the Markets are expected to remain range bound with some volatility. Positive caution is advised for today.