Daily Market Trend Guide -- Thursday, December 15, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY                                                                    December 15, 2011

The second half of the session yesterday turned out to be disappointing again as the Markets gave up its intraday recovery to end the session yet again with losses. It ended the day at 4763.25, down by 37.35 points or 0.78% and in the process have still managed to form a higher top and higher bottom as shown in the chart below.

Today’s session is expected to be a critical session for the Markets. The Markets are expected to open weak once again are today expected to lend some stability if the technicals are to be believed as the opening is expected to be around its long term trend support in the range of 4700-4710, which is the red line drawn in the above chart. This level is expected to act as a critical support for the Markets.

Having said this, the NIFTY has lost 299.35 points or 6.03%  in last five sessions and with today’s weak opening expected, it would have lost around 350-odd points. Also, we would like to point out that the NIFTY has been constantly adding Open Interest since last three session which has resulted into creation of shorts in the system. This is evident from the fact that the NIFTY Premiums on the futures have reduced from 25-odd points 3-4 days back to almost at par (Zero) yesterday.

The RSI—Relative Strength Index on the Daily Chart is 39.8571 and is neutral as no negative divergence or failure swing is seen. The MACD is bearish as it is trading below its signal line.

There is no doubt that the negative sentiments, both domestic and external are weighing heavy on the Markets. But given the RSI at 39, and the negative opening around the support levels expected today and with having the Markets losing around 350-odd points straight, it is unlikely that the Markets will break the support line (the red line drawn on the Chart) easily without a technical pullback.

The weak opening today should be used to try and average any existing long position with a strict stoploss. There are bright chances that the Markets see a technical pullback which it saw a day before, and the only factor that can resist this is the RBI announcements tomorrow. Thus, caution is likely to prevail, but the trend is expected to be clearer after tomorrow, with a bias for a sharp technical pullback. Continuance of cautious approach is advised without any 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