Daily Market Trend Guide -- Tuesday, July 05, 2011

MARKET TREND FOR TODAY

Though the Markets ended the day with modest gains, it did so with some amount of resistance after coming off from its opening highs and trading in a narrow range later and in the process have formed a lower top but higher bottom on the Daily High Low Charts.

For today, expect the Markets to take a breather from the up move that it was showing and thus, expect the Markets to open on a flat note and look for directions.

With the Markets expected to open on a flat note, the levels of 5680 and 5705 shall continue to act as resistance and the levels of 5609 and 5560 shall act as supports.

The Markets have shown a pullback of over 9% in last couple of sessions, and especially its up move beyond its 50-DMA and 100-DMA has slightly become unhealthy as both of these averages have reported a negative crossovers.

The RSI—Relative Strength Index on the Daily Charts is 63.3611 and it does not show any failure swing. However, NIFTY has made its no 14-day high but the RSI has not and this is NEGATIVE DIVERGENCE.

The Daily MACD continues to trade above its signal line.

The Markets, as explained above, have given a lower top and also a negative divergence on the RSI and this is, the first signs of the Markets losing momentum in the short term.

If this happens, the most immediate supports would come in at the levels of 100 and 500 DMAs at Close levels which are 5549 and 5514 respectively. On the upside, further up move shall occur only after Markets moves past the 5705 levels.

All and all, the activities in the Markets are going to remain highly stock specific and thus, it is advised to remain ultra selective while making fresh purchases while continuing to vigilantly protect profits at higher levels. Intraday volatility cannot be ruled out.

While avoiding over leverage, high degree of caution is advised today with stock specific outlook.

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