Daily Market Trend Guide -- Thursday, November 24, 2011

MARKET TREND FOR TODAY                                                  November 24, 2011

The Markets saw a similar intraday trend that it has been seeing in last couple of sessions. It opened down, remained sideways doing nothing until mid session, and  then saw a huge selling pressure in the second half, recovered a bit and finally ended the day at 4706.05, posting a deep cut of 105.90 points or 2.20%. The Markets saw huge volumes yesterday of over Rs. 2.50 lakh Crores and formed a sharply lower top and lower bottom on the Daily High Low Charts.

For today, expect the Markets to open weak again following weak global cues. As seen in the above chart, the Markets have  breached the levels of 4770-4780, (the black support line) and also breached the support levels of 4720, the lows from which it bounced back for three times, (just below the black support line).

For today, the support exists for the Markets near 4692 and 4640 levels. Today we have some contradictory reading. The Markets, technically speaking have broken the important trend and support levels and thus, have given a sell signal. 

However, having said that, on the Daily Charts, the Markets have moved again into the OVERSOLD territory. The RSI—Relative Strength Index is 28.5091 and it has reached its lowest value in the last 14-days. It does not show any negative divergence or failure swings. However, it now trades in OVERSOLD territory. The Daily MACD continues to remain bearish trading below its signal line. 

Apart from the above reading, the NIFTY has first time reported net addition in total Open Interest in NIFTY Futures. Also, the PCR has fallen to 0.86 (sharply from 0.96) which is near bottoming out levels.

However, technical factors / readings have been defied by the Markets which are under severe FII lead pressure and the NIFTY has seen decline of 582.90 points or 11.57% in last 10 sessions without acknowledging any legitimate technical supports. Again, on the other side, the CoC (Cost-of-Carry) continues to decline across stocks which indicates heavy built up of short positions in the system.

Having said all this, there is clear contradiction in technical reading, F&O Statistics and what is actually happening in the Markets, which is a clear indication that the Markets are under artificial pressure lead by few FIIs without any major retain participation. Today is the expiry day and we will continue to see the volatility remain in the Markets and the session weighed down by rollover centric activities.

Again, technically speaking, the Markets are OVERSOLD and a technical pullback is OVERDUE, if not in the morning, then later or after expiry of this current series. Highly cautious approach while avoiding aggressive positions is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in    
http://milan-vaishnav.blogspot.com
+91-98250-16331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com