Daily Market Trend Guide -- Wednesday, August 03, 2011

MARKET TREND FOR TODAY

Yesterday, the Markets saw a gap down opening following global weakness cues and even weaker technicals and remained in the negative territory through out the session seeing no recovery and ended yet another day with losses. In this process, it has also given a sharply lower top and lower bottom on the Daily High Low Charts.

Today, technical paint a weak picture. Thus, today, following weak technical cues and global weakness, we are again likely to see weak opening in the Markets today.

With weak and negative opening expected in the Markets today, the intraday trajectory that it forms post weak opening will again play a critically important role along with the volumes. For today, the levels of  5935 and 5370 shall act as supports and the levels of 5480 and 5500 shall act as resistance on the upper side.

The RSI—Relative Strength Index on the Daily Chart is 42.2278 and it does not show any negative divergence. However, it has reached its lowest value in last 14-days which is Bearish.

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

Having said this, it is important to note the following. Yesterday, the Markets have closed near the weekly and daily support levels of 5430. Today’s weak opening will see the Markets opening below those levels. In event of this, this levels of 5430 shall become temporary resistance. However, at the same time, the Nifty Futures have shown heavy addition of open interest yesterday indicating creation of short positions in the Markets.

All and all, the Markets continue to remain technically weak. However, due to statistical reasons, we may see a minor pullback post negative opening which would heavily depend upon the intraday trajectory that the Markets will form. In view of this, it is advised to avoid blanket shorts until the intraday direction is established. Stock specific cautious approach is advised for today.

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