Daily Market Trend Guide -- Monday, February 15, 2016

MARKET REPORT                                                                                  February 15, 2016

Markets had a deeply volatile session on Friday as it plunged to its fresh 52-week lows but recovered during the day to end flat with nominal gains. The Markets saw a modestly positive opening but this opening was bit weaker than what it was expected. After briefly trading into the green the Markets slipped into negative territory. By the first half of the session, the Markets had made its fresh 52-week lows as it formed its day’s low of 6869. However, the second half of the session saw bit of short covering coming in. The Markets attempted to recover and at one point recovered all of its losses to trade in the positive territory. It also went on to form the day’s high of 7034.80. After hovering around those levels, it came off a bit and settled the day at 6980.95, posting a minor gain of 4.60 points or 0.07% but continued to form a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, FEBRUARY 16, 2016

We had pointed out in our Friday’s edition that the Markets may find a short term bottom for themselves. Though fresh intraday lows were observed in Friday’s session but at Close levels, the Markets have ended flat. Today, we can expect the Markets to open on a decently positive note and continue with its pullback that it initiated in the second half of the Friday’s session. However, once again, sustenance of opening gains and the key levels of 7240 would be the two critical things to watch out for in coming sessions.

For today, the levels of 7030 an 7045 will act as immediate resistance levels for today. The support would come in at 6920 and 6875 levels.

The RSI—Relative Strength Index on the Daily Chart is 28.0910 and though it does not show any bullish or bearish divergence or failure swings, it trades in “oversold” territory. The Daily MACD is bearish as it trades below its signal line. On Candles, a long lower shadow occurred which often signals bullish reversal for immediate short term if it occurs near support levels or when a security is “oversold”.  On the Weekly Charts, the Weekly RSI is 31.0747 and it has reached its lowest level in last 14-weeks which is bearish. It does not show any bullish or bearish divergence. The Weekly MACD is bearish as it trades below its signal line.

On the derivative front, the NIFTY February futures have added further over 10.71 lakh shares or 5.43% in open interest indicating further addition of short positions in the Markets.

Coming to pattern analysis, the Markets have tested one of the most important levels in recent times. On Friday, it took intraday support at 200-DMA on the Weekly Charts. It saw a sharp short covering rally once it tested those levels. It is important to note that this is one of the major pattern support and if breached on the lower side will take the Markets into quite good amount of bearish mode for the immediate short term. Coming back to analysis on Daily Chart, the Markets breached the levels of 7240, its previous 52-week low while on its way down. While pulling up, its logical resistance will be the levels of 7240. This level will be the important level to watch out for.

All and all, the Markets are likely to open positive and continue with its pullback. If the pullback continues in the immediate short term, the immediate resistance levels for the Markets will be 7240. It is likely that the Markets pullback strongly and finds resistance at 7240. It is important to note that the Markets may face pullback as it has once again attempted to find a bottom but it will show no signs of confirmation even if it sustains the pullback today. Given this fact, though selective purchases may be made, extremely caution is advised at higher levels for today and days to come.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. 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

Daily Market Trend Guide -- Friday, February 12, 2016

MARKET REPORT                                                                                 February 12, 2016

What we saw yesterday was a example of  “selling excess” as the Markets opened gap down, and went down even more sharply to end the day with a  deed cut. The Markets ended almost around its May 2014 levels. The Markets, while tracking weak global cues opened with a gap down and traded sideways in the first half of the session, though no attempt to recover from the opening lows was seen. The great weakness crept in the second half of the session where the Markets saw very sharp selling pressure. The Markets not only breached its all possible intraday support levels but went below its psychological 7000-mark to form the day’s low of 6959.95. The weakness persisted until very end with virtually no major recovery happening, the Markets ended the day at 6976.35, posting a very deep cut of 239.35 points or 3.32% while forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, FEBRUARY 12, 2016

Speaking purely on technical terms, what we witness yesterday was a “selling excess” or “selling extreme” which often accompanies the final phases of a sharp downsides. Such action on the Charts is one of the major attempts to find a bottom for the immediate short term. Today, we are likely to see a decently positive opening and though it can be merely on account of short covering, we are likely to see some relief rally in the first half of the session. 

However, as usual, in order to such formations to sustain, it would be extremely important of the  Markets to maintain its opening gains.

For today, the levels of 7065 and 7090 will act as immediate possible resistance levels. The supports would come in at 6950 and 6910 levels.

The RSI—Relative Strength Index on the Daily Chart is 27.7804 and it has reached its lowest value in last 14-days which is bearish. However, it now trades in the “oversold” territory. The Daily MACD is bearish as it trades below is signal line.

On the derivative front, the NIFTY February futures have added over 10.90 lakh shares 5.85% in Open Interest. This indicates massive addition of fresh short positions in the system. The NIFTY PCR stands at 0.78 as against 0.82.

Coming to pattern analysis, the Markets held its original support level of 7540 that it broke 

on its way down as sacrosanct and while pulling back resisted to it twice. Since resisting it came off heavily and went on to make fresh 52-week lows in recent sessions. Yesterday, it went on to breach its recent 52-week low of 7240 and saw a sharp decline the moment the levels were breached. It formed it slow well below that and below the psychological 7000-mark. Having said this, as mentioned above, there are chances that the Markets have formed a pattern known as “selling extreme” on its charts. This is a major attempt to find a bottom for the short term. If the possible positive opening in the Markets are sustained, it is all likely that the Markets have formed its bottom for the immediate short term and some technical relief rally cannot be ruled out.

All and all, as mentioned above, even if we witness a rally, initially it is likely to be just on back of short covering as profit booking in short positions is likely to be witnessed. It is advised to refrain from fresh shorting at any levels. The technical pullback, if any, is likely to lead the Markets around 7240 levels, again at which we will see some pattern area formation. Until any pattern area formation occurs, it is best advised to keep the exposure very limited and adopt heavily cautious outlook on the Markets.

Milan Vaishnav,

Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA

Af. 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