MARKET TREND FOR TODAY February 3, 2012
Yesterday’s session remained quite volatile as the Markets saw two side swings reacting to the Supreme Court verdict as it cancelled 122 licences of telecom companies but ultimately went on to end the day with modest gains despite unfavourable technicals on account of continuing fund flows. The Markets opened on a positive note and made its intraday high of 5289.95 in the early morning trade. It however, lost ground suddenly reacting to the news as it pared all of its gains and dipped into negative and gave its intraday low of 5225.75. It recovered again, but traded in a range to finally end the day at 5269.90, posting a modest gain of 34.20 points or 0.65%. It has continued to form a higher top and higher bottom on the Daily High Low Charts.
Technically speaking, it has given a breakout from the falling trend line as drawn / shown above. But again, if this is read along with the lead indicators, the analysis remains more or less similar to that of yesterday.
For today, expect the Markets again to open on a flat note and trade range bound in the initial trade. The intraday trajectory would again continue to dominate the trade and the volatility is expected to be seen. For today, the levels of 5300 and 5325 are resistance and the levels of 5190 and 5140 are supports on the Charts.
Having said this, we again would like to draw attention that the lead indicators in the Markets continue to point towards impending correction and immediate weakness. The RSI—Relative Strength Index on the Daily Chart is 71.3410 and it does not show any failure swing and is now in “OVERBOUGHT” territory again. Further, the NIFTY has given its 14-Day high but RSI has no. This is BEARISH DIVERGENCE. The Daily MACD continues to remain above its signal line but on the Candles, A Spinning Top has occurred. During a rally, it usually signals potential loss of momentum in the Markets.
Having said this, again, we reiterate our stand of caution in the Markets. The flow of funds have been driving the Markets but it has got technically dangerous since last couple of sessions and we continue to reiterate that no aggressive long positions should be built as such drives, once over, shows equally sharp correction and there are chances that one gets up trapped with purchases at higher levels. Though stock specific activities would be seen, any long profits should be booked / protected at higher levels and high degree of caution should be exercised.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.