Daily Market Trend Guide -- Monday, December 12, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY                                                           December 12, 2011

After a weak close on Thursday, the Markets continued its disappointing performance on Friday too, following global weakness and the caution the world Markets exercised before the EU Summit. The Markets opened weak on expected lines and went on to give its intraday low of 4841.75. It made a sharp recovery in the mid session recovering almost all of its losses but pared those recovery again towards the end and ended the day at 4866.70 posting a loss of 76.95 points or 1.56%. The Markets have ended the week with net loss of 183.45 points or 3.66%.

 

As evident from the above chart, there is no structural breach on the Daily Chart but the Markets have went on to form a sharply lower top and lower bottom on the Daily High Low Chart.

The Markets, this week, again continues to give slightly contradictory reading on the Daily and Weekly Charts. For today, the Markets are expected to open on a modestly positive note and look for directions. The Markets are expected to open modestly positive and further add to its gains and for this, the intraday trajectory that it forms after opening would be critically important and the Markets will have to remain in rising positive trajectory as long as possible. The levels of 4910 and 4965 shall act as resistance and the levels of 4810 and 4780 are likely supports.

 

The RSI—Relative Strength Index on the Daily Chart is 43.9386 and it shows no negative divergence or failure swings. The Daily MACD continues to remain bullish as it trades above its signal line. 

As evident from the Weekly Chart above, again, there is no structural breach as yet on the Charts. However, the Markets have been making a sharply lower bottoms but the level of 4780 continues to remain a all critical support.

Having said this, even with no structural breach on the Charts, NIFTY Futures have reported shedding of 9.62% in Open Interest which is a worry part of the story. This needs to be replaced with fresh buying. On the other hand, most of the stock futures, including major NIFTY components have shown addition of Open Interest with the fall indicating creation of fresh shorts in the Markets.

Further to this, the Markets are likely to react to IIP numbers which shall be announced today and which are going to be dismal. However, most of this stands discounted in the Markets. All and all, lack of direction in the Markets is expected to continue. This will keep the Markets in a range and bit volatile. However, no shorts are advised until the Markets breaches the critical levels, but as usual, by the time it at all breaches, the indicators would stand Oversold. The NIFTY PCR stands sharply lower at 1.02 down from 1.38 two days back. It is continued to adopt a cautious stock specific outlook while protecting long profits and avoiding any short or aggressive positions.

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