MARKET TREND FOR TODAY
July 27, 2012
The expiry session yesterday turned out to be utterly
disappointing, especially in the last hour and half of the trade wherein the Markets
saw vertical deep cuts after spending the entire day in a extremely narrow
range. The Markets opened positive and
gave its intraday high of 5126.30 in the early seconds of the trade. It soon
dipped into negative, but it traded in a very narrow range with capped losses.
This continued until late afternoon session, but the Markets saw a sharp
volatile and vertical cut in the last hour and half of trade. This was mainly
due to rollover dominated activities as the premium in the August series rose.
It saw a intraday low of 2032.40. It finally ended the day at 5043, with net
loss of 66.60 points or 1.30%. The July series has ended with net loss of 2.30%
in NIFTY. It has formed a lower top and lower bottom on the Daily High Low
Charts.
What was seen yesterday was a pure scare that had happened
lead by severe rollover activities. Though, on the Charts, the Markets breached
the important supports, it is set to give a gap up opening today and open above
the critical supports that it breached. The key would be to sustain above those
levels and the intraday trajectory would thus be of great importance today.
For today, the levels of 5102-5015 has both the moving
averages, 50-DMA and 200-DMA and these would continue to act as resistance. It
would be of critical importance that after the gap up opening that is expected,
the Markets remains on the positive rising intraday trajectory and capitalized
on the opening gains.
The RSI—Relative Strength Index on the Daily Chart is
36.2329 and it has reached its lowest value in last 14-days. Though, it does
not show any negative divergence. The Daily MACD continues to trade below its
signal line.
Yesterday’s session has remained heavily dominated with
rollover centric activities, especially in the last hour of the trade. It has
ended up adding phenomenally large Open Positions. NIFTY alone has added over
60 lakh shares in Open Interest. Stock Futures have shown similar trend. This
signifies huge creation of shorts and they are all likely to lend support.
Another important factor to be seen is the behavior of the Markets post opening
vis-à-vis its 50 and 200-DMA and the intraday trajectory that it forms post
opening.
All and all, as of now, it is strongly advised not to
attempt to any shorts until the yesterday’s lows are breached again. There are
huge open positions that has been added and a short trap can occur. Most of the
NIFTY components have gone oversold and it is all likely that the Markets again
moves up to its 200-DMA, consolidate there for a while and moves ahead. Even aggressive
purchases may be avoided, however selective purchases can be made. Optimism is
advised for today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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