MARKET TREND FOR TODAY February 10, 2012
The Markets continued to rise in the last half hour of the trade as it has been doing in the last couple of session and ended the day again with modest gains. The Markets opened on a negative note and gave its intraday low of the day at5338.90 in the morning trade. The Markets almost entire session in the negative territory in the range bound and little volatile manner as expected. However, the last half hour of the trade saw a vertical spurt as it ended the day at 5412.35 posting yet another gain of 44.20 points or 0.82%. The volumes remained near average and the Markets formed a higher top and almost similar bottom on the Daily High Low charts.
For today, expect the Markets to open on a moderately negative note and look for the trend. The levels of 5400-5410 shall be of critical importance today as they have been acting as immediate resistance. The opening above the levels or moving past above the levels of 5420 may see some strength in the Markets even if the Markets are extremely “overbought” and thus this levels continue to be dangerous especially as there has been no correction. For today, the levels of 5420 and 5450 shall act as resistance and the levels of 5350 and 5290 shall act as immediate support. The opening below the levels of 5400 may see the Markets resisting at 5400-5410 levels.
Having said this, the lead indicators of the Markets continue to remain extremely “Overbought”. The RSI—Relative Strength Index on the Daily Chart is 75.2424 and continues to show a clear “bearish divergence” as NIFTY has made a new 14-day high but the RSI has not. The Daily MACD continues to trade above its signal line.
The FIIs have for the first time have remained net sellers, though of a nominal amount. The movement in the currency too showed some bias towards impending correction. If the Markets moves above 5400, as per pattern analysis, it would be another breakout but we are absolutely sceptical with regard to the sustainability of such a breakout (move above 5400) as the lead indicators have remained unsustainably “overbought”. Such wild move above the levels of 5400 may lure the investors to try and further catch the rally but we continue to should high degree of caution and advice to stay away from such technically dangerous frenzy of up move. The Markets have seen up move of over 750 points in NIFTY and this has occurred with very little amount of consolidation, and thus desperately needs a correction, even if it intends to reverse its overall trend.
Overall, very selective action in stocks advised with continuing to very vigilantly protect profits at higher levels. Aggressive exposure in any form should be avoided. Overall, high degree of caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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