Saturday, May 14, 2011

Daily Market Trend Guide -- Friday, May 13, 2011

MARKET TREND FOR TODAY


Despite better than expected IIP data, the Markets badly came off its highs and closed with losses and in the process have formed a lower top and lower bottom on the Daily High Low charts.



Today, we are likely to see some respite from the weakness we saw and we are likely to see the Markets stabilize at lower levels due to favorable technicals and also due to important pattern support. For today, expect the markets to open on a flat note and look for direction. It is likely that the Markets may trade in a capped range on either side but are likely to stabilize at these levels.



For today, with the Markets expected to open flat, the levels of 5540 and 5595 are likely to act as resistance and the levels of 5470 and 5450 are likely to act as supports.



All the lead indicators continue to remain in place. The RSI—Relative Strength Index on the  Daily Charts is 37.0893 and it shows no negative divergence or failure swings and is therefore neutral. The Daily MACD continues to trade below its signal line.



At this juncture, it is important to take a critical look at some things. The Markets have seen a massive built up of short positions in both NIFTY and Stock Futures.  Even yesterday, massive open interest of 11.29% was added with the discount widening to 7points. This makes in evident that massive shorts are created in the Markets. Further more, there is a major pattern support in form of a trend line formed from 5177 levels which shows support at 5475 –5470 levels.



All and all, Markets had no reason to cry foul when it saw better than expected (even if it is QoQ) IIP numbers. Given this, with the huge shorts seen in the Markets and with the Markets trading near pattern supports, its again a matter of time that we see at least short covering and stability returns to the Markets. While strictly avoiding shorts, cautious outlook is advised for today.
  
Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.