Daily Market Trend Guide -- Wednesday, September 07, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

After trading weak and lagging on back of global weakness, the Indian Markets again showed remarkable resilience as it  recovered over 120-odd points to end the day with decent gains and in the process have formed a sharply higher top and lower bottom on the Daily High Low Charts.

For today, expected the Markets to open on a modestly positive note and look for directions. Though the participation / volumes had improved yesterday, today also, the continuation and quantum of up move shall continue to depend upon the intraday trajectory and the volumes.

The Markets are expected to open modestly positive and trade positive, at least in the initial trade. For today, the levels of 5110 and 5175 shall act as resistance and the levels of 5035 and 4980 shall continue to act as supports.

All lead indicators point towards continuation of pullback. The RSI—Relative Strength Index on the Daily Chart is 47.5355 and it has reached its highest value in last 14-days which is BULLISH. It does not show any negative divergence.

The Daily MACD continues to remain bullish as it trades above its signal line.

The Open Interest across stocks and Index have shown addition which indicates that along with short covering some amount of fresh longs have also been added and this reading is supported  with FIIs remaining net buyers in both Cash and Derivative segments.

If the pullback continues, which is likely, the Markets are likely to rise upto the levels of 5170, and this may act as immediate resistance. This was the Double Bottom support that the Markets broke while coming down.

All and all, fresh purchases may be made while exercising great amount of caution, while strictly avoiding shorts until the trend suggests. At the same time, profits may continued to be protected at higher levels as some volatility is bound to remain ingrained. Overall, 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