Daily Market Trend Guide -- Friday, September 09, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

Though remaining capped and range bound for most part of the session, the Markets managed to end yet another day with modest gain while continuing it s pullback and in the process have formed a slightly higher top and higher b bottom on the Daily High Low Charts.

Today, the Markets are again likely to open on a flat note and continue to consolidate like it did yesterday and look for directions. Since the Markets are likely to continue to consolidate, they shall continue to depend upon the intraday trajectory that the Markets will form.

With flat to mildly negative opening expected, the levels of 5170 and 5230 shall continue to act as resistance and the levels of 5115 and 5090 shall act as support. The behavior of the Markets vis-à-vis the levels of 5170 shall be critically important. This is because, as mentioned in our yesterday’s edition of Daily Market Trend  Guide, the Markets have resisted precisely at those levels. For a sustainable pullback to continue, it would be critically important for the Markets to move past the levels of 5170 and trade above that.

The RSI—Relative Strength Index on the Daily Chart is 52.8114 and it does not show any negative divergence. It has reached its highest value in last 14-days and this is Bullish. On the Candles, though Spinning Top has occurred, the overall pattern remains Bullish.

The Daily MACD too continues to trade above its signal line.

The NIFTY Futures OI has shown minor shedding and the discount of 10-points has been replaced with premium of 2-points. This is due to short covering that we witnessed yesterday.

All and all, until the Markets comfortably moves past the levels of 5170, it is likely to continue to consolidate in a given range and remain slightly volatile. Though selective purchases may be made, the profits should be vigilantly protected at higher levels. While avoiding shorts, cautious optimism is advised for today.

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