Follow up on Daily Market Trend Guide dated April 15, 2011

Follow up

Even with the Markets closing with robust gains on Wednesday, (Thursday being a holiday) and ended the day with robust gains, we had categorically mentioned in our edition of Daily Market Trend Guide dated April 15, Friday that not a single technical factor is in favor of any sustainable up move. The April 15th Edition is reproduced below for yor quick reference.

We had catagorically mentioned that "...Even with the Markets ending at high point of the day, there are certain important things that should not be overlooked. 

First, the RSI—Relative Strength Index on the Daily Chart is 65.5872. It does not show any failure swing but NIFTY has given its 14-day high but RSI has not. This is BEARISH DIVERGANCE. On the Candles, Engulfing Bullish Pattern has occurred. When this occurs during an uptrend, which is the case with NIFTY, it may be the last engulfing top which indicates a potential top. This, however needs confirmation that the potential weakness may creep in.

Further, what signifies the rise as short covering is the fact that NIFTY 5900 Call saw shedding of OI and 5800 Put saw addition of Open Interest.  Further to that, the levels of 5944 continue to act as immediate top. The Markets will see sustainable up move only after bottom of 5944 and any such up move shall make the Markets OVERBOUGHT again...."

Keeping the above mentioned analysis in view, the Markets behaved perfectly in the manner expected and described above. Not only it did not went above 5944 as it reported a day's high of 5907.35, it spent the entire  in negative falling trajectory and ended the day near the low point of the day.

At this jucture, with shorts being added again, apart from short covering, the immediate supports for the markets are near its 200 and 100 DMAs at 5724 and 5707 respectively.

Watch this space for a detailed Daily Market Trend Guide, unarguably one of India's most acclaimed, on Monday morning before Market opens.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in 
+91-9825016331

milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

Daily Market Trend Guide -- Friday, April 15, 2011 (Which our Clients received in the Morning before markets opened)

MARKET TREND FOR TODAY

The Markets saw a huge spate of short covering on Wednesday and as a result, after opening on a lower note, closed near the high point of the day with robust gains and as a result have formed a sharply higher top but lower bottom on the Daily High Low Charts.

Today’s session will be critical session for the Markets. For today, even when the Markets have closed near the high point of the day, expect the Markets again to open on negative note and look for directions.

The levels of 5944 will continue to act as immediate top and resistance and further the Markets may find resistance at 5960. The levels of 5850 and 5800 may act as supports. Even with the Markets ending at high point of the day, there are certain important things that should not be overlooked.

First, the RSI—Relative Strength Index on the Daily Chart is 65.5872. It does not show any failure swing but NIFTY has given its 14-day high but RSI has not. This is BEARISH DIVERGANCE. On the Candles, Engulfing Bullish Pattern has occurred. When this occurs during an uptrend, which is the case with NIFTY, it may be the last engulfing top which indicates a potential top. This, however needs confirmation that the potential weakness may creep in.

Further, what signifies the rise as short covering is the fact that NIFTY 5900 Call saw shedding of OI and 5800 Put saw addition of Open Interest.  Further to that, the levels of 5944 continue to act as immediate top. The Markets will see sustainable up move only after bottom of 5944 and any such up move shall make the Markets OVERBOUGHT again.

All and all, there is no need to get carried away with the rise due to the factors explained above. It is advised to continue to maintain very stock specific approach while protecting longs at the higher levels. Cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331

milanvaishnav@mymoneyplant.co.in 
 milanvaishnav@yahoo.com

Daily Market Trend Guide - Wednesday, April 13,2011

MARKET TREND FOR TODAY

The Markets continued to remain weak and correct as analyzed in our Monday’s edition and closed with losses and in the process continued to form a lower top and lower bottom on the Daily High Low Charts.

Again, the Markets have closed near the low point of the day, and technically speaking, the Markets are likely to open on a weaker note and look for directions.

For today, technically, as well as taking cue from weak global markets, the Markets are likely to open on a lower note and would again be continued to be dictated by the intraday trajectory that it forms.

With negative opening expected in the Markets, the levels of 5825 and 5840 shall act as resistance on the upper side and the levels of 5720 and 5700 shall act as supports.

The RSI—Relative Strength Index on the Daily Chart is 58.5384 and is neutral as it shows no negative divergence or a failure swing. The Daily MACD continues to trade above its signal line but is getting weaker steadily.

On the Candles, the steady downward pattern continues to remain bearish.The Markets have turned weak after getting OVERBOUGHT couple of days back. Technically speaking, the Markets have reported negative cross over of averages (100 & 200 DMA) which is the technical sign that the Markets may remain weak in the immediate short term. Also, the immediate supports are only around 5700-5720 levels and thus, there are all chances that Markets may see those levels. However, some short covering may seen intraday as there are shorts in the system but steady chart pattern remains weak in the short term.

All and all, it is advised to continue to remain highly stock specific in taking longs while strictly protecting profits at any higher levels. Fresh longs either in NIFTY or it s components may be taken only there is a potential reversal in form of a higher top and higher bottom. Continuance of cautious approach is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in

+91-9825016331

milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

Daily Market Trend Guide -- Monday, April 11, 2011

MARKET TREND FOR TODAY

The Markets saw some definite signs of weariness after resisting for quite long time and spending the days in sideward consolidation as it closed on Friday with modest gains and has formed higher top but sharply lower bottom on the Daily High Low Charts.Technically speaking, with the Markets closing near the day’s low, they usually tend to open and trade negative, at least in the initial trade.

With the Markets expected to open on a negative note, the trend would be dictated with the intraday trajectory that the Markets form. The levels of 5860 and 5890 shall act as resistance and the levels of 5810 an 5755 shall act as supports. The Markets hare poised at cross roads with the indicators on Daily and Weekly Charts presenting a contradictory picture, but with a downward bias.

The RSI—Relative Strength Index on Daily Chart is 63.9848 and is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade above its signal line. But on the Candles, three black candles have continues to form and though they are not big enough to create three black crows, the steady downward pattern ins Bearish.

On the Weekly Charts, the MACD has given a buy signal as it has crossed above its signal line. The RSI too is bullish and shows positive divergence. On the other hand, on Candles, A Doji Star has occurred which often signals reversal from the top. Also, long upper shadow has occurred. This is typically a bearish signal especially when it occurs near high prices or during or immediately after a rally. Also a negative cross over of averages is reported as 100 DMA has cut 200 DMA from above.

Thus all and all, the performance of the Markets in following day or two shall decide the trend for the week and thereafter. Even with these conflicting readings, the bias remains towards downside until the levels of 5944 are breached on the upside. Thus, continuation of stock specific approach with high degree of caution is advised for today.


Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331

milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com