Gemstone Equity Research & Advisory Services

Friday, November 25, 2011

Daily Market Trend Guide -- Friday, November 25, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY 

The Markets yesterday saw a much awaited and long overdue technical pullback as it ended the day with modest gains. The Markets opened weak yesterday and after touching the low of 4639.10, rose over 130-odd points from they days low to end the day at 4756.15, posting a decent gain of 50 points or 1.06%. In the process, the Markets have formed a parallel bar with similar top and bottom on the Daily High Low Charts.

For today, expect a subdued opening in the Markets and today’s session would be critical for the Markets to decide the trend for coming weeks. Today, expect the Markets to open on a subdued note with the levels of 4780 and 4845 acting as resistance levels and the levels of 4720 and 4680 acting a crucial support levels. The RSI—Relative Strength Index on the Daily Charts is 32.8289 and it has crossed above its OVERSOLD formation which is Bullish. It does not show any negative divergence or failure swing. The Daily MACD continues to remain bearish as it trades below its signal line. On the Candles, A While Body occurred as the prices closed quite higher than they opened. 

Today’s trend would continue to critically depend on the behaviour of the Markets vis-à-vis the levels of 4780. The 4780 levels continue to remain a critical support before 4720 levels (which is currently likely to act as resistance until markets moves past the levels of 4780). It would be imperative for the Markets to move past this levels as soon as it can so that it can re-enter the broad trading range of 4720-5170 it traded in for almost two months. Until it moves past 4780 levels, it may accumulate with slight downward risk with the levels of 4720-4680 acting as supports.

All and all, the volumes have been good and there continues to be large rollovers of short positions yesterday and there are chances that we may see the Markets move past this level of 4780. For this, maintenance of levels of above 4720 would be critical. There are chances that after a subdued opening we may see the trend improving as the session progresses. However, a dip below 4720 will infuse some weakness in the Markets. While stock specific purchases may be seen, cautious approach is continued to be advised for the day.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
http://milan-vaishnav.blogspot.com
+91-98250-16331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

Thursday, November 24, 2011

Daily Market Trend Guide -- Thursday, November 24, 2011

MARKET TREND FOR TODAY November 24, 2011

The Markets saw a similar intraday trend that it has been seeing in last couple of sessions. It opened down, remained sideways doing nothing until mid session, and then saw a huge selling pressure in the second half, recovered a bit and finally ended the day at 4706.05, posting a deep cut of 105.90 points or 2.20%. The Markets saw huge volumes yesterday of over Rs. 2.50 lakh Crores and formed a sharply lower top and lower bottom on the Daily High Low Charts.

For today, expect the Markets to open weak again following weak global cues. As seen in the above chart, the Markets have breached the levels of 4770-4780, (the black support line) and also breached the support levels of 4720, the lows from which it bounced back for three times, (just below the black support line).

For today, the support exists for the Markets near 4692 and 4640 levels. Today we have some contradictory reading. The Markets, technically speaking have broken the important trend and support levels and thus, have given a sell signal.

However, having said that, on the Daily Charts, the Markets have moved again into the OVERSOLD territory. The RSI—Relative Strength Index is 28.5091 and it has reached its lowest value in the last 14-days. It does not show any negative divergence or failure swings. However, it now trades in OVERSOLD territory. The Daily MACD continues to remain bearish trading below its signal line.

Apart from the above reading, the NIFTY has first time reported net addition in total Open Interest in NIFTY Futures. Also, the PCR has fallen to 0.86 (sharply from 0.96) which is near bottoming out levels.

However, technical factors / readings have been defied by the Markets which are under severe FII lead pressure and the NIFTY has seen decline of 582.90 points or 11.57% in last 10 sessions without acknowledging any legitimate technical supports. Again, on the other side, the CoC (Cost-of-Carry) continues to decline across stocks which indicates heavy built up of short positions in the system.

Having said all this, there is clear contradiction in technical reading, F&O Statistics and what is actually happening in the Markets, which is a clear indication that the Markets are under artificial pressure lead by few FIIs without any major retain participation. Today is the expiry day and we will continue to see the volatility remain in the Markets and the session weighed down by rollover centric activities.

Again, technically speaking, the Markets are OVERSOLD and a technical pullback is OVERDUE, if not in the morning, then later or after expiry of this current series. Highly cautious approach while avoiding aggressive positions is advised for today.