MARKET TREND FOR TODAY
July 24, 2012
Markets had a thoroughly disappointing session as it
succumbed to global weakness and drifted lower after a negative opening to end
the day with further losses. The Markets opened on a weaker and negative note
and opened around its short term support levels. As the session went ahead, it
showed no signs of recovery and went on to give the day’s low of 5108.10. No
attempts to recover were seen as the Markets ended the day near the low point
of the day at 5117.95 posting a loss of 87.15 points or 1.67%. Though the
Markets breached the short term support levels, it still remained within the
filters and closed above its serious
long term support levels. The volumes remained higher than the average and it
has formed a sharply lower top and lower bottom on the Daily High Low Charts.
For today, expect the Markets to open on a flat to mildly
positive note and look for directions. We can expected some stability to return
as the Markets currently are very near to its important support levels. The
intraday trajectory would continue to remain important and it shall dominate
the trend for the day.
The levels of 5101, which is the 200-DMA for the Markets and
the levels of 5089 which is the 50-DMA are likely to act as major supports for
the Markets as Close levels. This is especially when, there is still no
structural breach on the Daily Charts.
The RSI—Relative Strength Index on the Daily Charts is 42.2230
and it has reached its lowest point in last 14-days. Though it does not show
any negative / bearish divergence. The Daily MACD continues to trade below its
signal line.
Given this fact, it is important to note that there is net
addition of Open Interest in Nifty Futures and Stock Futures across the board
which signifies heavy creation of shorts in the system. Further to this, the
NIFTY PCR stands at 0.99, which is quite healthy at this point.
Another important factor to note that the Markets are very
near and trades a notch above its critical support levels of 200-DMA and
50-DMA. Further important to note from the pattern analysis is that the 50-DMA
and 200-DMA are all set to give a positive crossover in coming days.
All and all, this being expiry week, we may see the movement
dominated with rollover activities. The external factors might keep the markets
tizzy and range bound and bit volatile, but only for a while. Since there is no
structural breach as of today on our Charts, any positions, on either side
should be taken quite selectively. Aggressive shorts should be avoided.
Overall, continuation of cautious outlook is advised with mild optimism for
today.
Milan
Vaishnav,
Consulting
Technical Analyst,
+91-98250-16331
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