Daily Market Trend Guide -- Monday, December 05, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY                                                                   December 05, 2011 

The Markets on Friday saw furtherance of the gains as it opened flat and traded in a range but saw a good up move in the second half of the session as it ended the day at 5050.15, posting a robust gain of 113.30 points or 2.29%. The Markets have shown a very smart recovery in the week that has gone by and have ended the week with net gains of 340.10 points or 7.07%. On the Daily Charts, the Markets have formed a higher top and similar bottom on it.

For today, expect the Markets to open on a flat to mildly negative note and look for directions. Though the Markets have ended the day near the high point of the day, it is technically expected to resume its up move and trade positive, at least in the initial trade. However, it is expected to open flat to mildly negative and look for directions. For today, the levels of 5090 and 5031, in the form of 100-DMA are expected to act as resistance and the levels of 5019 and 4970 are expected to act as supports.

All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 54.6715 and it has reached its highest value in last 14-days which is Bullish. Also, RSI has set a new 14-day high but the NIFTY has not yet, and this is Bullish Divergence. The Daily MACD is bullish as it has reported a positive crossover and now trades above its signal line

As seen in the Weekly Chart just above this, the Markets have given a very clear picture on the Daily and Weekly Charts. On the Daily Charts, the immediate resistance remains at 5131 levels and if it moves above that , then at 5239 levels in this week given the falling channel and the trend line that it is expected to react to. On the Weekly Charts, it has similar formation with similar trend resistance coming in at 5225 levels. On the Weekly Charts, the Markets is forming a Descending Triangle formation with similar multiple bottoms and falling tops.

Having said this, there is great likelihood that that given the expectation of positive developments in Europe expected this Thursday and Friday, we may see continuation of rally barring some consolidation and might resist to the trend resistance which is very clear on Daily and Weekly Charts. The another chance that uncertainty on the retail FDI front may see some negative sentiments and given the rise of 7% in the previous week, we may see some profit taking and minor consolidation and short term weakness, and both of this will keep the Markets in its broad range.

All and all, this week is expected to be very crucial and intraday trajectory would continue to dominate the intraday trend and we are expected to see a very decisive movement which will mostly see the markets breaking out of the broad range on either side. It is continued to be advised to refrain from shorts and take a very stock specific positions, while at the same time, continuing to protect profits vigilantly at higher levels. Overall, cautious optimism 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