Tuesday, June 12, 2012

Daily Market Trend Guide -- Tuesday, June 12, 2012

MARKET TREND FOR TODAY                                                          June 12, 2012
The Markets ended the day on a modestly negative note as the technicals anyway pointed towards consolidation and also due to  S&P comments on possible downgrade as the Markets pared all of its morning gains. The Markets opened on a decently positive note as it gave its intraday high of 5124.45 in the morning trade itself. It continued to move sideways maintaining its opening gains but saw sudden paring of gains after the S&P’s comments. It not only pared all of its gains, but dipped into the negative to give the day’s low of 5040.70. It finally ended the day at 5054.10, with a modest loss of 14.25 points or 0.25%. Though the Markets have ended the day near the low point of the day, it has still formed a higher top and higher bottom on the Daily High Low Charts.

Even technically speaking, apart from reaction to the S&P’s comments, the consolidation phase in the Markets is likely to continue with the levels of 5125 acting as a immediate top. During the consolidation phase, the intraday trajectory are always important to avoid any further weakness but the levels of 200 and 50-DMA would continue to act as resistance at Close levels.

Today, the levels of 5075 and 5125 shall continue to act as resistance and the levels of 5010 and 4985 shall act as immediate supports.

The lead indicators continue to remain comfortably in place. The RSI—Relative Strength Index on the Daily Chart is 55.9919 and it is neutral as it shows no negative / positive divergence or failure swings. The  Daily MACD continues to trade above its signal line and is bullish. 

Further to this, the NIFTY and Stock Futures have continued to add in net Open Interest indication the creation of shorts. The NIFTY PCR stands at 1.44.

All and all, the consolidation phase shall continue and the sustainable up move shall occur only above the levels of 5125 and the levels of 200 and 50-DMA shall continue to pose resistance at Close. This shall keep the Markets volatile with some intermittent profit taking bouts. However, with the undercurrent still being intact, shorts and aggressive longs should be avoided and very selective purchases may be made while vigilantly protecting the profits. Overall, cautious outlook is advised for the day.

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


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