MARKET TREND FOR TODAY February 13, 2012
The Markets on Friday showed some further signs of correction as it ended the day with modest losses after spending the brief morning session into the green. The Markets opened into positive and gave its intraday high of 5427.75 as it traded positive in capped range in the morning trade. The Markets thereafter transformed into negative falling trajectory. In the early afternoon trade, it not only dipped into the red, but went on to give its intraday low of 5341.05, coming off 80-odd points from its day’s high. It saw some recovery towards the end but still ended the day at 5381.60, posting a modest loss of 30.75 points or 0.57%. With this, the Markets has continued to form a Parallel Bar once again on the Daily High Low charts and has ended the Week with net gains of 55.75 points or 1.05%.
For today, expect the Markets to open on a flat note and look for directions and today, the intraday trajectory would determine if the Markets are to consolidate in a range or continue with the correction. The Markets have formed a Parallel Bar on the Daily High Low Charts but with the difference that it has ended the day on the lower side and theoretically speaking, this shows likelihood of continuation of correction.
The levels / range of 5400-5430 have become immediate top for the Markets and no sustainable up move will occur until we move past those levels. For today, the levels of 5400 and 5430 shall act as resistance and the levels of 5310 and 5275 shall act as supports.
The RSI—Relative Strength Index on the Daily Chart is 71.5846 and it is neutral as it shows no negative divergence or failure swings. However, it continues to remain in “overbought” range. The Daily MACD continues to trade above its signal line.
On the Weekly Charts, the RSI is 57.8331 and it has reached its highest value in last 14-weeks. On the Candles, A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.
The NIFTY February Futures have declined more (49 points as against 30 Points Nifty) and has also shown a decline in Open Interest which shows some unwinding in February Futures. Overall Open Interest has increased and this signifies the possibility of profit taking in February futures and overall short creation in next month’s futures. The NIFTY also has a pattern resistance at 5400-5410 levels on Weekly Charts too.
All and all, no sustainable up move is expected until the Markets moves past 5400-5430 levels and that too with its lead indicators in place and not with them in “overbought” range. Until this happens, it shall either trade in range, or might continue with correction which is now imminent and overdue. We continue to reiterate our stand of exercising high degree of caution and any long positions should remain highly stock specific and selective. Overall, cautious outlook is advised for the day.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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