MARKET TREND FOR TODAY February 8, 2012
The Markets did show some signs of weariness today as it ended the day with modest losses after a volatile session. The Markets opened on a positive note on global cues and gave its intraday high of 5413.35 in the early seconds of the trade. It however spent the first half of the session in a capped range with limited gains. It dipped into the red in the final leg of the session to give its day’s low of 5322.95. It hovered around those levels until the end of the session and ended the day at 5335.15, posting a modest loss of 26.50 points or 0.49%. It the process, it has formed a higher top but lower bottom on the Daily High Low charts.
For today, expect the Markets to open flat to mildly positive again and look for directions. The consolidation is overall likely to continue as the level of 5400-5410 as a pattern resistance in form of Double Top continues to act as immediate top for the Markets.
Having said this, the levels of 5390 and 5410 are likely to act as resistance today and the levels of 5290 and 5230 may act as supports.
The RSI—Relative Strength Index on the Daily Chart is 72.0100 and it continues to remain in “overbought” and is neutral as it does not show any negative divergence or failure swing. The Daily MACD continues to trade above its signal line. On the Candles, A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are "high," it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trend line, or price resistance level), the long black candle adds credibility to the resistance.
The Markets did react to the possibility of slowdown in GDP growth on expected lines. The indications for a consolidation / correction were seen in the broader markets yesterday. Today also, in the second half of the session, we may also see the Markets reacting to the European markets as action on Greek debt may come today. Discussing all this external factors, the bottom line is that the technicals clearly indicates continuation of consolidation / corrective phase in the Markets. The levels of 5400-5410 has become an immediate top and with the Markets remaining in “Overbought” range, no sustainable rally shall occur until the Markets moves past these levels and also at the same time, ceases to be in “overbought” territory.
All and all, continuation of cautious outlook is advised for today. Very selective stock specific purchases may be made but profits too should continued to be protected on either side. Overall, high degree of caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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