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

MARKET TREND FOR TODAY                                                                       December 7, 2011

After a surge on Friday to end the day with robust gains, the Markets consolidated on expected lines on Monday as it remained volatile and ended the day with moderate losses to consolidate. The Markets opened on a lower note took support near its 50-DMA the way we had categorically mentioned in our Monday’s edition of Daily Market Trend Guide. The Markets came of its intraday low of 5002.05 to end the day at 5039.15 to end the day with nominal losses and in the process have formed slightly lower top and sharply higher bottom on the Daily High Low Charts. The volumes remained slightly above average on Monday.

For today, expect the Markets to open on a moderately positive note and look for directions. The Markets are expected to open positive and continue with its up move at least in the initial trade. For today, the levels of 5080 and 5125 are expected  technical resistance levels and the levels of 5017 and 4980 are technical supports for today. All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 53.9899 and it shows no negative divergence or failure swings and is therefore neutral. The Daily MACD is bullish as it trades above its signal line.

As evident from the above Chart, the Markets continues to remain in the broad trading range and the immediate likely resistance would be the 100-DMA levels of 5125, however, this would broadly depend upon the intraday trajectory it forms during the day. It would be critically important for the Markets to maintain the levels above its 50-DMA  which is 5017 today to avoid any weakness creeping in. The NIFTY futures have reported net addition in Open Interest which is a positive sign.

Further to this, the events of Thursday and Friday in Europe are likely to see very key decisions coming in and in view of this, S&P has shown possibility of downgrade of six countries if expected developments do not come up. This would pause danger to debt worth $ 1.80 trillion. This is an important event and there are all chances that despite positive and favourable technicals, we may see the Markets showing a cautious mood and might continue to consolidate. This continuation of consolidation will keep the markets volatile and therefore range bound movements may be seen. Even small bouts of profit taking cannot be ruled out.

Keeping this in mind, we may see the Markets in cautious trajectory and this keeps the Markets currently in very critical phase. It is advised to continue to avoid shorts until any clear signals and at the same time, make very selective purchases. While heavily stock specific activities may be seen, it is also advised to keep protecting profits vigilantly at higher levels as the Markets can take either direction. However, in absence of any external negative news flow, the bias remains on the upside. Overall, positive but cautious outlook 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