MARKET TREND FOR TODAY February 09, 2012
The Markets continued to rise on liquidity while remaining heavily “overbought” and continued to end the day with modest gains after a very volatile session. The opened on a flat note and after briefly trading in a capped range, went on to give intraday high of 5396.90. However, post this high, in the second half of the session, the Markets saw a sudden paring of gains as it saw a bout of profit taking and went on to briefly trade into the negative territory. However, again, as it has been happening over past couple of sessions, the Markets saw a sharp recovery from its lows and finally ended the day at 5368.15 posting yet another modest gain of 33 points or 0.62%. In the process, it has formed a Parallel Bar, i.e. almost similar top and bottom on the Daily High Low Charts.
For today, expect the Markets to open on a moderately negative note and trade in negative at least in the initial trade and look for directions. Some indications of weariness have started creeping in as evident from yesterday’s volatile intra day behaviour and this is likely to weigh in a bit today, following void in any concrete development in the Greece Debt matter, especially when the technicals remain very “overbought”.
For today, the levels of 5400-5410 shall continue to act as resistance and immediate top until the time it is breached with the supports coming in as low as 5290 and 5210.The technicals continue to remain “overbought”.
The RSI—Relative Strength Index on the Daily Chart is 73.4303 and it continues to remain in “overbought” range. The NIFTY again reported its 14-day high but RSI has not and this is “Bearish Divergence”. The Daily MACD continues to remain above its signal line.
All and all, the analysis for to day again remains more or less as that of yesterday. Some signs of individual corrective activities (stock specific) are seen today also, we can expect such trend to continue with bias towards some correction, which is long overdue and the absence of which is making the Markets unhealthy and dangerous. There are chances that volatility may remain and we may see some sharp profit taking bouts as seen yesterday. However, it should be noted that large cash flows and with the Markets being in “overbought” range, it also increases the sharp speculative movements triggered by few large players in the Markets. We continue to reiterate to avoid any significant and aggressive positions in the Markets as they continue to remain “overbought” and exercise high degree of caution for the day.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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