MARKET TREND FOR TODAY February 17, 2012
The Markets saw a fierce consolidation yesterday where it shed some weight in the middle of the day, but recovered to end the day with negligible losses. The Markets opened on a negative note as expected and remained in the volatile downward trajectory as it went on to give the intraday low of 5483.75 in the afternoon trade. However, in the second half, it saw some recovery, as it recovered to trade flat. It ended the day at 5521.95 posting a negligible loss of 10 points or 0.18%. The volumes remained above average at 1.80 lakh crores but less than the previous session. It has formed a lower top but higher bottom on the Daily High Low Charts.
Today, the tussle between the technicals and the liquidity will continue. There is nothing on charts that warrant a strong opening. However, we are set to see a strong opening today following strong global cues. The Markets are expected to open strong despite contrary technicals and then depend upon its intraday trajectory, if they are to continue with gains or begin a correction.
The levels of 5560 and 5595 are statistical resistance today and supports comes as low at 5400 and 5345 levels.
The lead indicators continue to show the Markets in dangerous condition from technical aspect. The RSI—Relative Strength Index on the Daily Chart is 76.7239 and it continues to remain “extremely overbought”. It is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to trade above its signal line. On the Candles, A Spinning Top has occurred. When this happens during a rally or near highs, as in case with NIFTY, it indicates a potential reversal of trend. This, however needs confirmation.
Another statistical indicator that shows the Markets over-stretched is the NIFTY PCR which is now 1.65, a notch below being overbought.
Having said this, liquidity is likely to continue to chase the Markets, but as often repeated in our previous editions, the correction is imminent and is now “seriously long overdue”, given the above reading. We continue to reiterate to remain ultra selective and stock specific today avoid any king of aggressive positions. When the liquidity stops a mad chase cannot be told, but whenever it does, it gives a violent and sharp correction and this can be harmful to retain investors who potentially get trapped at higher levels. The rise, however fundamentally justified, is technically unsustainable without a correction / consolidation. Therefore, high degree of caution in the Markets should continued to be exercised.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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