Daily Market Trend Guide -- Thursday, June 02, 2011

MARKET TREND FOR TODAY

Though on lower volumes, the Markets continued its up move yesterday as it ended the day with modest gains and in the process have continued to form a higher top and higher bottom on the Daily High Low Charts.

The Markets have risen 243 points or 4.47% in the previous five sessions and have closed near the resistance of its 100DMA levels of 5586 and this is likely to act as a temporary resistance at which the Markets are expected to consolidate.

For today, expect the Markets to have a negative opening following weak closing of US Markets and resultant weak Asian Markets. With the Markets expected to open on a negative note, the levels of 5560 and 5530 are likely to act as supports. On the upside, the levels of 5590, and 5630 shall continue to act as resistance. However, lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 54.6526 and it does not show any negative divergence. It has reached its highest value in last 14-days which is BULLISH. The Daily MACD continues to remain positive as it trades above its signal line.

Having said this, the FIIs have remained net buyers in both Index and Stock Futures and NIFTY Futures have went on to add significant open interest. Also, there is no signal on the Charts that can trigger any major weakness. Since the Markets have closed near one of its resistance, it is likely to resist and consolidate before further up move. Thus, there are chances of only consolidation happening and thus with the expected lower opening, there are chances that we may see the Markets improve post weak opening given the technicals. It is advised to still strictly refrain from shorts, and given the intraday trajectory, selective purchases may be made. Overall, cautious optimism is advised for today.

  

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

milanvaishnav@yahoo.com