Gemstone Equity Research & Advisory Services

Monday, November 21, 2011

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

MARKET TREND FOR TODAY

The Markets ended its seventh consecutive session in the red as it ended the Friday’s session with losses. Though it saw a very sharp and strong short covering from its day’s lows but still continued to form a lower top and lower bottom on the Daily High Low Charts.

For today, we can expect a subdued opening again in the Markets. Technically speaking, since the Markets have ended the day near the high point of the day of Friday post short covering, it is technically supposed to continue the up move and its recovery. But global weakness is all likely to weigh it down again and thus give a subdued opening in the Markets.

With such subdued opening expected, once again, like Friday, the intraday trajectory would continue to play critically dominant role in dictating the trend. For today, the levels of 4850 and 5820 shall continue to act as supports and the levels of 4940 and 4985 shall act as supports.

The RSI—Relative Strength Index on the Daily Charts is 35.1115 and it has reached its lowest value in last 14-days which is bearish. However, it does not show and negative / bearish divergence. The Daily MACD continues to trade below its signal line.

On the Weekly Charts, the RSI is 41.2853 and it shows no negative divergence or failure swing and is neutral. The Weekly MACD continues to remain positive as it trades above its signal line.

On the Candles on the Daily Charts, A long lower shadow occurred. This is typically a bullish signal if it occurs near low price level or a support level. Further to this, this is expiry week and the session will remain dominated with rollover centric activities. As said above, the Markets have lost 383.55 points of 7.48% in straight seven sessions. Given all this there are chances that we open negative but may see discomfort at lower levels. Spikes are expected in form of short covering. The volatility is likely to stay. Given all this, there are chances that one sees a short trap at lower levels. It is advised to continue to avoid aggressive positions, avoid shorts and adopt cautious, but mildly positive outlook for the day.

Milan Vaishnav,

Consulting Technical Analyst,

www.MyMoneyPlant.co.in

+91-9825016331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Friday, November 18, 2011

Daily Market Trend Guide -- Friday, November 18, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets continued with its “structured trend” as pointed out in our yesterday’s special edition of Daily Market Trend Guide as it moved in a capped range for the most part of the session and finally gave up again in the last hour and half and in the process ended the day with deep cut and while continuing to form a lower top and lower bottom on the Daily High Low Charts.

For today, such behavior of the Markets will continue taking cues from the global markets.

For today, expect the Markets to open on a subdued note like yesterday and remain in the “unnatural grip” of few players as it has been in last couple of sessions and look for directions. However, it would continue to depend upon the intraday trajectory it forms and will get dictated by it. For today, the levels of 4905 and 4875 are supports on Charts whereas the levels of 4990 and 5025 are resistance as per the Charts.

The RSI—Relative Strength Index on the Daily Chart is 36.5476 and it has reached its lowest value in last 14-days which is bearish. However, it still do not show any negative or bearish divergence on the Charts. The Daily MACD continues to trade below its signal line.

In continuation of what we pointed out in our yesterday’s special edition, our point of the Markets being in “unnatural grip” is vindicated with few observations. The Markets gets bulk of its volumes in the last hour of the trade. Further, if one analyzes, the intraday patter of 5 out of 6 sessions have been strikingly similar. Further, while moving up from 5000 levels and coming back, the Markets have completely ignored the 100-DMA (it never resisted it and never took support also) and this is completely in defiance of technical parameters and completely unnatural. In addition to this, the Markets have had a similar trend irrespective of rise or fall in Open Interest in NIFTY and stock futures. This too is unnatural parameter. Having said this, the Stock Futures and most of the components of NIFTY are nearly OVERSOLD and have big outstanding Open Position signifying shorts in the system while NIFTY has lost 354.60 points or massive 6.89% in six sessions while creating huge shorts in most of the stock futures and PCR dropping to 1.02. It is advised, again, to refrain from aggressive positions and maintain cautious outlook for the day.