Friday, June 1, 2012

Daily Market Trend Guide -- Friday, June 01, 2012

MARKET TREND FOR TODAY                                                        June 01, 2012
The sagging GDP numbers failed to deter the Markets after the initial weakness as the hopes of rate cuts overweighed the  Markets as it ended the day after a smart recovery from the day’s low. The Markets opened negative following global weakness and traded absolutely in a capped range as it gave its day’s low of 4883.55 in the late morning trade before the Q4 GDP numbers came out. It stood 5.3% for the Quarter and 6.1% YOY. The Markets did react for a brief while to this. However, it thereafter transformed itself into a rising trajectory and recovered smartly from its day’s low and even went on to give the day’s high of 4949.25, recovering almost 65-odd points from its day’s low. It however ended the day at 4924.25, posting a net loss of 26.50 points or 0.54%. It has continued to form a lower top and lower bottom on the Daily High Low Charts.

Today’s session likely to remain volatile as well as the Markets are expected to open on a modestly negative note and look for directions. The global cues are not that bad and the technicals are neutral with little bias towards  upside. The Markets will enter into new derivative series today digesting the GDP numbers.
The levels of 4960 and 4985 are immediate resistance and the levels of 4890 and 4855 are immediate supports on the Daily Charts.

The lead indicators still continue to remain in place with RSI—Relative Strength Index at 41.6444 and it does not show any negative divergence or failure swing and therefore, it is neutral. The  Daily MACD is bullish as it still continues to trade above its signal line.

With average NIFTY and Market-wide rollovers completed in to June series, there is no statistical reason to worry. The Markets will have to fight more with the fundamental reasons and the overall technicals of the Markets suggest that it shall remain in a range and invariably volatile. The Markets have made a potential bottom on the 18th of May and the key would be to see if it reverses from current levels before reaching those May 18th lows and thereby making a higher bottom (a potential trend reversal from a pullback) or it testes those lows again. This phase would be highly volatile with major resistance coming in at 5020 levels and 5068, which is the 200-DMA.

All and all, the repeat of yesterday’s trend likely. Modestly lower opening cannot be ruled out. However, shorts may be strictly avoided as there are no such triggers and very selective stock specific approach is advised and profits should be continued to be protected. Overall, cautious approach, with tinge of optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331

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