Daily Market Trend Guide -- Thursday, July 21, 2011

MARKET TREND FOR TODAY

We had very categorically expected in our yesterday’s edition of Daily Market Trend Guide that the Markets are all likely to open on a positive note but gradually are likely to correct as technicals pointed towards such possibilities. The Markets behaved precisely in this manner, opened positive but ended the day with losses and thereby formed a slighter higher top but lower bottom on the Daily High Low Charts.

Today, such corrective behavior of the Markets is expected to continue. The Markets are likely to open on a mildly negative note and look for directions, keeping the session volatile and  highly stock specific.

With the Markets expected today to open on a mildly negative note, the levels of 5590 and 5610 are likely to act as resistance and the levels of 5506 and 5480 are likely to act as supports.

The RSI—Relative Strength Index on the Daily Chart is 50.5043 and it shows no negative divergence or failure swings and is therefore neutral.

The Daily MACD continues to remain bearish as it trades below its signal line.

On the Candles, An Engulfing Bearish Line has occurred. If this occurs during an uptrend, which is the case with NIFTY, it indicates a temporary loss of momentum for the Markets.

The Premium in the futures in yesterday’s trade reduced to just 2-odd points from 12 points in the previous session and with little addition in the Open Interest, some shorts are seen being created again in the system. Having said this, the technicals as well as pattern analysis suggests that the Markets are likely to remain in corrective mode today also and this may keep the session both volatile and range bound. Some intermittent short covering may not be ruled out but overall the session is likely to have a negative bias.

Overall, it is advised to continue with the cautious and stock specific approach while protecting profits at higher levels.

  

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