MARKET TREND FOR TODAY
May 14, 2012
The Markets continued to remain terribly volatile and got
finally OVERSOLD on Friday as it moved all over the places before ending the
day with losses. The Markets opened negative and after remaining in a capped
range on the negative side, it saw sudden deepening of the cut as it reacted to
IIP Numbers and went on to give the day’s low of 4906.15. However, after
remained in a capped range again, the Markets saw a massive short covering from
those levels. It not only recovered all of its losses, but also went into the
green and gave its intraday high of 4976.25. It however came off again and
finally ended the day at 4928.90, posting a loss of 36.80 points or 0.74%. It
has continued to form lower top and lower bottom on the Daily High Low Charts
and have ended the week with net loss of 157.95 points or 3.12%.
The Markets are finally OVERSOLD. Today, expect the Markets
to open flat and are expected to remain directionless in the initial session
and have all technical chances to improve as the session goes ahead. The
intraday trajectory would continue to remain important.
For today, the levels of 5010 and 5045 are immediate
resistance levels and the levels of 4905 and 4860 are immediate supports.
The lead indicators are OVERSOLD. The RSI—Relative Strength
Index on the Daily Chart is 28.8923 and it now trades in OVERSOLD territory.
Though it has reached its lowest value in last 14-days, it does not show any
negative divergence. The Daily MACD
continues to trade below its signal line. On the Weekly Charts, the RSI
is 41.2005 and it has reached its lowest value in last 14-days. The 200-Week
Moving Average stands at 4810.
NIFTY and Stock Futures both have gone ahead in adding Open
Interest and the NIFTY PCR stands at 0.81, which too is nearing Oversold
levels.
Having said this, from the above reading, we can fairly
conclude that the Markets on Daily Charts are absolutely OVERSOLD and some
respite from the current weakness can be seen, at least in the initial week.
Even if we presume that the Markets may touch the levels of 4810 mentioned
above, it should not happen before a pullback is seen on the Daily Charts in
the initial week.
All and all, the Markets are loaded with shorts positions,
are Oversold and thus, there are fair chances set for a short covering and bias towards up move. There are
chances that we open flat and improve as the session goes ahead. However,
volatility is definitely to remain. Any sharp up move should be used in
protecting profits on existing positions and the retail investors are continued to be advised to remain light on
the positions and refrain from shorts by any means. Overall, a cautiously
positive outlook is advised for today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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