Gemstone Equity Research & Advisory Services

Friday, February 10, 2012

Daily Market Trend Guide -- Friday, February 10, 2012

MARKET TREND FOR TODAY February 10, 2012

The Markets continued to rise in the last half hour of the trade as it has been doing in the last couple of session and ended the day again with modest gains. The Markets opened on a negative note and gave its intraday low of the day at5338.90 in the morning trade. The Markets almost entire session in the negative territory in the range bound and little volatile manner as expected. However, the last half hour of the trade saw a vertical spurt as it ended the day at 5412.35 posting yet another gain of 44.20 points or 0.82%. The volumes remained near average and the Markets formed a higher top and almost similar bottom on the Daily High Low charts.

For today, expect the Markets to open on a moderately negative note and look for the trend. The levels of 5400-5410 shall be of critical importance today as they have been acting as immediate resistance. The opening above the levels or moving past above the levels of 5420 may see some strength in the Markets even if the Markets are extremely “overbought” and thus this levels continue to be dangerous especially as there has been no correction. For today, the levels of 5420 and 5450 shall act as resistance and the levels of 5350 and 5290 shall act as immediate support. The opening below the levels of 5400 may see the Markets resisting at 5400-5410 levels.

Having said this, the lead indicators of the Markets continue to remain extremely “Overbought”. The RSI—Relative Strength Index on the Daily Chart is 75.2424 and continues to show a clear “bearish divergence” as NIFTY has made a new 14-day high but the RSI has not. The Daily MACD continues to trade above its signal line.

The FIIs have for the first time have remained net sellers, though of a nominal amount. The movement in the currency too showed some bias towards impending correction. If the Markets moves above 5400, as per pattern analysis, it would be another breakout but we are absolutely sceptical with regard to the sustainability of such a breakout (move above 5400) as the lead indicators have remained unsustainably “overbought”. Such wild move above the levels of 5400 may lure the investors to try and further catch the rally but we continue to should high degree of caution and advice to stay away from such technically dangerous frenzy of up move. The Markets have seen up move of over 750 points in NIFTY and this has occurred with very little amount of consolidation, and thus desperately needs a correction, even if it intends to reverse its overall trend.

Overall, very selective action in stocks advised with continuing to very vigilantly protect profits at higher levels. Aggressive exposure in any form should be avoided. Overall, high degree of caution is advised for today.

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, February 9, 2012

Daily Market Trend Guide -- Thursday, February 09, 2012

MARKET TREND FOR TODAY February 09, 2012

The Markets continued to rise on liquidity while remaining heavily “overbought” and continued to end the day with modest gains after a very volatile session. The opened on a flat note and after briefly trading in a capped range, went on to give intraday high of 5396.90. However, post this high, in the second half of the session, the Markets saw a sudden paring of gains as it saw a bout of profit taking and went on to briefly trade into the negative territory. However, again, as it has been happening over past couple of sessions, the Markets saw a sharp recovery from its lows and finally ended the day at 5368.15 posting yet another modest gain of 33 points or 0.62%. In the process, it has formed a Parallel Bar, i.e. almost similar top and bottom on the Daily High Low Charts.

For today, expect the Markets to open on a moderately negative note and trade in negative at least in the initial trade and look for directions. Some indications of weariness have started creeping in as evident from yesterday’s volatile intra day behaviour and this is likely to weigh in a bit today, following void in any concrete development in the Greece Debt matter, especially when the technicals remain very “overbought”.

For today, the levels of 5400-5410 shall continue to act as resistance and immediate top until the time it is breached with the supports coming in as low as 5290 and 5210.The technicals continue to remain “overbought”.

The RSI—Relative Strength Index on the Daily Chart is 73.4303 and it continues to remain in “overbought” range. The NIFTY again reported its 14-day high but RSI has not and this is “Bearish Divergence”. The Daily MACD continues to remain above its signal line.

All and all, the analysis for to day again remains more or less as that of yesterday. Some signs of individual corrective activities (stock specific) are seen today also, we can expect such trend to continue with bias towards some correction, which is long overdue and the absence of which is making the Markets unhealthy and dangerous. There are chances that volatility may remain and we may see some sharp profit taking bouts as seen yesterday. However, it should be noted that large cash flows and with the Markets being in “overbought” range, it also increases the sharp speculative movements triggered by few large players in the Markets. We continue to reiterate to avoid any significant and aggressive positions in the Markets as they continue to remain “overbought” and exercise high degree of caution for the day.