MARKET TREND FOR TODAY February 07, 2012
The Markets continued to post modest gains for the fifth session in a row despite being oversold and with bearish divergence on the Daily Charts. The Markets opened a positive note on global cues and in the morning trade itself gave its intraday high of 5390.05, which is also a pattern resistance in form of a Double Top. The Markets then pared all of its gains to trade almost flat by late afternoon trade. However, it maintained its “tradition” of a structured pullback as it recovered in last half hour of the trade to finally end the day at 5361.65, posting a modest rise of 35.80 points or 0.67%. It has continued to form a higher top and higher bottom on the Daily High Low Charts.
For today, expect the Markets to open again on modestly positive note and look for directions. The Markets will grossly depend upon the intraday trajectory which we saw in a falling channel for the entire session yesterday, which can be a mild sign of weariness in the Markets. The Markets have resisted near 5400 levels, which is a pattern resistance as shown in the Chart above in form of a Double Top and this shall act as immediate top for the Markets.
Though it may seem repetition of what we have been mentioning in last couple of editions, the Markets continue to remain grossly “overbought” and quite stretched out . For today, the levels of 5400-5420 shall act as resistance and the levels of supports are seen as low as 5270 and 5210 levels.
The RSI—Relative Strength Index on Daily Chart is 74.9995 and continues to remain in grossly “overbought” range. Also, it continues to show “Bearish Divergence” as NIFTY reported a new 14-day high but the RSI has not. The Daily MACD continues to remain above its signal line.
Having said this, again, as mentioned above, that at the cost of repetition, we continue to advice to refrain from taking any aggressive long positions. Whatever longs that are taken selectively, profits should continue to be vigilantly protected. The Markets are getting unhealthy which this kind of technical indicators and thus, correction remains imminent and overdue. The Markets will find some reason to correct in form of rising Brent Crude prices, uncertainty over Greece, reaction to advance GDP numbers set to be announced, fears of China slowdown on persistence of Europe Crisis, etc., etc., etc. However, the factors would certainly remain technical.
All and all, it is continued to be advised to work out the day with great degree of caution and refrain from aggressive positions. Very selective stock specific action would be seen, but overall, very cautious outlook is advised for the day.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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