MARKET TREND FOR TODAY
July 17, 2012
Despite the lower than expected inflation numbers which came
in at 7.25% for June as against 7.55% in May, the Markets remained in a range
and it furthered its losses in the last hour of the trade to end the day with
modest losses. The Markets opened on a moderately positive note and traded in a
capped range. It dipped into the red in the late afternoon trade, but again
recovered to trade in the green. However, the Markets continued to remain a
capped range until late afternoon. The Markets extended its losses on lower
volumes as it dipped into the red again and went on to give the day’s low of
5190.45. It finally ended the day at 5197.25, posting a moderate loss of 30
points or 0.57%. It has formed a lower top and lower bottom on the Daily High
Low Charts.
The Markets are expected to open today on a decently
positive note and trade positive at least in the initial trade. The intraday
trajectory would be important to maintain and capitalize on the expected
morning gains. Though the Markets ended negative yesterday, it is still in
a broad range and above its critical
support levels.
For today, the levels of 5220 and 5265 are immediate
resistance on the Charts whereas the levels of 5190 and 5170 are important supports.
The lead indicators continue to point towards some weakness
as RSI—Relative Strength Index on the
Daily Chart is 50.5040 and it has reached its lowest value in last 14-days
which is bearish. Also, the RSI has made a new 14-day low, but NIFTY has not
yet, and this is bearish divergence. The Daily MACD remains bearish as it
trades below its signal line.
Having said this, it is equally important to note that the
NIFTY has added in Net Open Interest and so has stock futures. This implies
that with the yesterday’s decline, there has been no unwinding in the Markets.
Also important to note is that there is no structural breach on the Charts as
the Markets continue to trade above its critical support levels of 5170-5160
levels. So long as the Markets trade above this levels, there is no negative
breach on the Charts and no long lasting weakness can be expected. Also, NIFTY
PCR stands at 1.17, leaving significant gap for the up side.
All and all, range bound movement expected again as the
Markets trade in a range. We continue to advice to avoid shorts as there is no
structural breach on the Charts. Also, aggressive longs are not advised as the
Markets continue to remain in a range. It would be prudent to remain selective
in purchases while protecting profits at higher levels. Overall, positive
caution is advised for today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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