MARKET TREND FOR TODAY February 6, 2012
The Markets continued to rule in the artificial manner repeating its pattern of remaining trend less during the day and seeing as sharp up move towards the end of the session. The Markets continued to end the day with gains defying technical parameters on Friday too as it continued to surge dangerously on technical parameters. The Markets remained flat throughout the session, saw a sharp up move towards the end and ended the day at 5325.85, posting yet another gain of 55.95 points or 1.06%. With this, it has continued to form a higher top and higher bottom on the Daily High Low charts and ended the week with net gains of 121.15 points or 2.36%.
Today also, expect a positive opening in the Markets and expect the Markets to trade in positive at least in the initial trade. The technical indicators continue to caution against the unabated rally which has been in total defiance of the technicals and today, we might see positive opening and then some profit taking if the artificial behaviour of the Markets does not continue.
We have drawn attention of the Investors several times, but again we do it that the “typical” behaviour of the Markets of moving sidewards for most part of the session and then seeing a sudden spurt is nothing but structured behaviour of few big FIIs and thus, we see total defiance of technical indicators. On several occasions in the Markets, we have seen the retail small investors getting stuck at the higher prices when an imminent correction sets in.
Having said this, for today, the levels of 5400 is the immediate resistance on the Charts. The supports are expected quite down at 5255 and 5205.
The RSI—Relative Strength Index on the Daily Chart continues to remain in ”overbought” range at 73.6260. Though the NIFTY has made a 14-day high, the RSI has not and this is “Bearish Divergence”. The Daily MACD continues to trade above its signal line and is moving towards being ‘Overbought”. On the Weekly Charts, the RSI still shows strength but the levels of 5400 remains a pattern resistance.
All and all, the overall analysis remains more or less the same that we have since last couple of sessions. The Markets are rising, showing “Bearish Divergence” on the lead indicators. These lead indicator warns in advance of any impending corrections / reversals in advance. The Markets usually tend to follow these lead indicators. What we feel that once this liquidity stops to chase, we may see a equally sharp correction. The total stock futures have seen shedding of over 3.67 crore shares in Open Interest, which too is a cautionary sign. We continue to reiterate our advice to refrain from any blanket long position and fiercely protect any long position profit at higher levels and prefer to remain in Cash until we see a corrected trend.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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