MARKET TREND FOR TODAY June 6, 2012
Volatility refused to go away as the Markets enjoyed a
positive start but failed to sustain its opening gains as it ended the day with
minor gains. The Markets opened on a positive note and gradually remained in
rising trajectory as it gave its intraday high of 4898.95 in the afternoon
trade. The volatility returned to the Markets as the Markets pared all of its
gains and virtually traded flat. It however recovered a little to finally end
the day at 4863.30, posting a minor gain of 15.15 points or 0.31%. The volumes
remained little below average and the Markets formed a higher top and higher
bottom on the Daily High Low Charts.
Expect the opening in the Markets today to be on a positive note
and but the that would cause the Markets to open around yesterday’s high levels
and thus it would be important for the Markets to remain in positive trajectory
and maintain / capitalize on the opening gains.
The levels of 4895 and 4930 are immediate resistance on the
Charts and the levels of 4830 and 4805 are immediate supports.
The lead indicators continue to remain in place. The RSI—Relative
Strength Index on the Daily Chart is 38.2228 and it is neutral as it shows no
negative divergence or failure swings. The Daily MACD continues to trade above
its signal line and is therefore bullish.
Having said this, it is important to note that the Markets
have so far held on to the potential bottom formation at 4788 levels of May 18th
and have attempted to rebound and take support at a double bottom formation
couple of days back. So, the Markets have apparently taken support and have
held on to the bottom, but at the same time have also not broken out of a
range. The Markets have been trading in a broad range of 4788 on the lower
level and 5020 on the upside. This broad range will have to be breached on the
upside if this potential bottom formation is to be confirmed.
So, given this reading, and with the NIFTY and Stock futures
both addition Open Interest and with the discount in NIFTY Futures widening a
bit, it can be fairly assumed that so far this
bottom is likely to be maintained, but at the same time, the Markets are
likely to remain in a capped range and this shall keep the Markets volatile and
intermittent bouts of profit taking cannot be ruled out.
Given this, it is advised to continue to maintain a strict
vigil on the open positions and protection of profits at higher levels is
advised. Purchases may be made but that should remain highly selective and
stock specific. Overall, positive approach but with good amount of caution is
advised for today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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