Daily Market Trend Guide -- Thursday, May 12, 2011

MARKET TREND FOR TODAY

Yesterday's trading session remained a listless session with positive consolidation as the Markets ended the day with modest  gains and thereby forming a lower top but higher bottom on the Daily High Low Charts and thereby continuing to remain in consolidation mode on lower volumes.

For today, we may see the Markets opening on a mildly negative note and look for direction on back of soft Global Markets. With the Markets expected to open on a mildly negative note, as like in previous sessions, the levels of 5605 and 5640 shall act as resistance and the levels of  5530 and 5480 shall continue to act as supports.

All  lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 41.7793 and it does not show any negative divergence or failure swings and is therefore neutral.

The Daily MACD continues to trade below its signal line but is on its improvement course.

The Markets have been consolidation after making a low of 5472 and is suffering from a feature of typical lack of participation, i.e. lack of retail volumes, a sign typical to consolidation. However, in these couple of sessions, though the Markets have consolidated and remained in a range, the FIIs and DIIs have remained net buyers in both Cash as well as Derivative Segments. Also, massive call writing is observed at 5500 strike price which indicates a strong statistical bottom.

All and all, there are chances that we may see negative opening today, but at the same time, there is all likelihood that we may see improvement from lower levels as the day progresses. It is advised to strictly avoid shorts and use any dip to make selective purchases, while continuing to protect profits at higher levels. However, sustainable up move shall occur only after the Markets moves past the levels of 5600. Cautious optimism is advised for today.

  

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