Friday, December 9, 2011

Daily Market Trend Guide -- Friday, December 09, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY                                                     December 9, 2011

Yesterday’s the Markets had a terrible session with the external as well as the internal worries weighed down the technicals as the Markets ended the  day with sharp cut. The Markets opened moderately weak and after briefly trading with capped losses, lost further ground. A feeble attempt to recover was made in the afternoon trade, but that soon gave up as the Markets went on to give the day’s low of 4921.45. It ended sharply lower at 4943.65, posting a loss of 118.95 points or 2.35% forming a sharply lower top and lower bottom on the Daily High Low Charts. Volumes remained moderately higher than the previous session.

Today, there are several contradictor readings on the global front as well as technicals. For today, expect the Markets to open initially on a lower note following weakness in global markets and then look for directions. For today, the levels of 4880 and 4865 are technical support levels whereas on the higher side, the levels of 5010 and 5045 are technical resistance levels. 

The RSI—Relative Strength Index on the Daily Chart is 47.9775 and is neutral as it shows no negative divergence or failure swing. The Daily MACD is still bullish as it trades above its signal line. 

Apart from the above technical reading, the worries from the Euro zone and the putting of FDI in retail on hold has thrown a larger question mark on the reforms that are facing serious political hurdles which are seen as factors that will further add to slowing down of growth. Again, on the other hand, the food inflation has seen 39-month low which is a positive sign.

Amid these technical reading, which shows no negative breach, the global and internal factors remain contradictory with negative bias. However, again most of the NIFTY components have shown addition in Open Interest along with the fall yesterday, indicating creation of short positions. However, taking view of all the factors mentioned above, the Markets are likely to weigh caution ahead of important news flow from Europe, weekend in between, IIP numbers coming in on December 12, and RBI Policy announcements which is expected to stop raising the rate which would add fuel to the fury.

So, this time, heavy caution outweighs the technicals but at the same time, there are large number of shorts in the system. It is important to note that the Markets are less likely to trade purely on technicals but would get dominated with the news flow and external as well as internal factors mentioned above. It is strongly advised for a retail investor to keep away from aggressive positions and refrain from shorts as there are chances that we see mild technical pullback after weak opening. Also, amid any kind of slightest positive news flow, we may see sharp short covering as witnessed in the previous week. Longs should be taken very selectively. It is also strongly advised to avoid creating fresh positions and maintain liquidity to absorb volatile movements in the Markets which are driven more by the external news flows rather than technicals. Overall, cautious outlook is advised for today.

Thursday, December 8, 2011

Daily Market Trend Guide -- Thursday, December 08, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY                                                                             December 8, 2011

The Markets had an little disappointing session yesterday as it spent most of its day in a tight 30-odd point range after opening but pared almost all of its gains in the last 45-minutes of the trade to end the day with moderate gains. The Markets, however, have more or less traded in the manner analysed in our yesterday’s edition. The Markets, after opening little lower, took support near its 50-DMA on expected lines and have so far maintained above that. In the process, the Markets have formed a higher top and higher bottom on the Daily High Low Charts  with average volumes of 1.26 lakh Crores.

Again, as evident from the above charts, the Markets have continued to remain in a range and today’s session and its analysis thereof, would be more or less same as that of yesterday as the Markets are again expected to consolidate, but with a upward bias.

For today, expect the Markets to open on a moderately lower to flat note. The cautious mood ahead of very critical EU Summit and the technical reason of little consolidation after the last week’s gain would weigh on the Markets and these two factors are likely to keen the Markets in a range and consolidation. For today, the levels of 5090 and 5122 are likely to act as resistance and the levels of 5015 and 4980 are likely to act as supports. The RSI—Relative Strength Index on the Daily Chart is 55.2702 and it has reached its highest value in last 14-days which is Bullish. It does not show any negative / bearish divergence. The Daily MACD continues to remain Bullish as it trades above its signal line. On the Candles, Three white candles has occurred. Though these are not big enough to create three while soldiers, the steady upward pattern is bullish.
Further to this, NIFTY Futures and most of its components have added moderate open interest showing creation of long positions and also good amount of shorts exists in the system.

Reading the above technical factors, one had to also take into account the upcoming EU summit and some major announcements from there which has held the world markets on toes. Some amount of caution is likely to weigh on the Markets towards close  or during the day which may keep it range bound during the day and bit volatile. European markets saw wild movements yesterday and US Markets recovered considerably from their day’s low.

All and all, cautious sessions ahead. The Markets are in a immediate range of 4980-5125 and we may see range bound movements with lack of conviction and full of caution ahead of major announcements. Shorts in the Markets should be avoided as per F&O figures and at the same time, profits should be protected at higher levels. Overall, cautious optimism is advised for today.

Wednesday, December 7, 2011

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.