Monday, January 2, 2012

Daily Market Trend Guide -- Monday, January 02, 2012

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MARKET TREND FOR TODAY                                                              January 2, 2012
The Markets spent the last week of the Year 2011 on a very low volumes, remained directionless for the most part of the sessions during the day, and ended the last four out of five days with losses. On Friday too, the Markets, after trading with almost 1% gain, suddenly pared all of its gains to end the day at 4624.30, posting a loss of 21.95 points or 0.47%. With this, the Markets have ended the week with net loss of 89.70 points or 1.90%.


Today also, we can expect a total flat and directionless opening in the Markets. The Markets are expected to open on a  flat note and thus continue to depend on the intraday trajectory it forms and also the volumes. Volumes would be critical for any up move because, they have been lower than average for the entire last week. Also, major global markets such as Hong Kong, Singapore, Japan and US are Closed today and this would certainly reflect domestic volumes too.
Further to this, the Daily and Weekly Charts continue to throw slightly contradictory signals and this would keep the Markets volatile and more or less directionless. But this contradiction has a bias towards up side. The RSI on the Daily Chart is 39.0160 and is neutral as it shows no negative divergence or failure swings. The Daily MACD still continues to be Bullish as it trades above its signal line.
On the Weekly Chart, the Weekly MACD is bearish as it trades below its signal line. But on the other hand, the Weekly RSI, which is 39.0412 shows a Bullish Divergence as the NIFTY has set a new 14-week low, but the RSI has not.
All and all, such conditions on the Charts are likely to keep the Markets overall volatile and directionless, but with a positive bias. Further, the volumes are certainly to remain a concern today and this may pose resistance to any sustainable upside or downside equally. Stock specific activity shall continue. Overall, it is advised to avoid aggressive positions on either side, especially on the short side and extremely selective stock specific purchases may be made while protecting profits at higher levels. Cautiously positive approach is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331

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