Daily Market Trend Guide -- Monday, May 16, 2011

MARKET TREND FOR TODAY

The Markets pared half of its gains after a strong session in the last hour of the trade. Though it still ended with gains, it has formed a slightly higher top and a similar bottom on the Daily High Low Charts.

The markets reacted on Friday to the assembly elections, in quite surprisingly manner. The effect of the selloff that we witnessed in the last hour of the session is likely to linger today in the opening trade.

Thus, we may fairly expect the markets to open on a negative note and look for directions. Also, hike in petrol prices are likely to dampen the sentiment and more damage will be done with the possibility of the rise in diesel prices which is likely anytime.

The RSI—Relative Strength Index on the Daily Chart is 42.2726 and is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade below its signal line. On the Weekly Charts, the RSI is 46.1422  and is neutral as it shows no negative divergence or failure swings. The Weekly MACD however has given a sell signal as it has closed below its signal line.

The most important thing is that the pattern support exists at 5470 levels. In even of negative / weak opening, the behavior of the Markets vis-à-vis the levels of 5470 would be critically important. Any weakness below this levels shall make markets weaker. Until then, the Markets shall remain in the range of 5610-5470 and thus the trajectory that it forms after negative opening would be important. Cautious approach is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com