Wednesday, September 5, 2012

Daily Market Trend Guide -- Wednesday, September 05, 2012

MARKET TREND FOR TODAY                                                       September 05, 2012
The Markets managed to hang on to its 50-DMA as support at Close levels as it began the day weak, but saw some recovery in the second half of the session to end  the day with modest gains. The Markets opened on a moderately negative note and traded in a capped range for half of the session.  The Markets thereafter saw some sharp recovery in the second half of the session. It its losses and went on to trade in positive territory. It also gave its intraday high of 5278.35 towards the end of the session. It finally ended the day at 5274, posting a modest gain of 20.25 points or 0.39%. In the process, the Markets have formed a slightly lower top and lower bottom on the Daily High Low Charts.

Expect the Markets to open again on a modestly negative note and look for directions. The Markets have been trapped in a very narrow range and the today’s opening will cause it to open near / around its 50-DMA levels again. Yesterday, it had resisted to the levels of 5280 which is a pattern resistance for the Markets. The intraday trajectory, would thus, continue to remain important.

The levels of 5280 and 5325 are immediate resistance on Charts and supports come in at 5262 and 5225 levels.

The RSI—Relative Strength Index on the Daily Charts is 46.9176 and it is neutral as it shows no failure swings or positive / negative divergence. The Daily MACD continues to trade below its signal line.

The F&O data continues to show divergent picture as the NIFTY has shed over 7.5 lakh shares in yesterday’s up move which shows heavy short covering from lower levels. It would be important to see if fresh longs are created after the shorts are covered. The NIFTY PCR stands unchanged at 0.91.

There was a pattern resistance at 5280 levels which the NIFTY breached and attempted to take support around its 50-DMA at Close so far. Today’s opening will again see the Markets struggling around those levels again. The volumes have remained around its average.

It can be concluded that the Markets are not completely out of the woods. The session will remain range bound and also bit volatile with sharp movements expected on either side. The Markets will have to see above 50-DMA or at least its filters to avoid weakness at Close. It is advised to avoid aggressive positions and remain extremely selective and light so far as fresh positions are concerned. Overall, continuance of cautious outlook is advised for today.

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


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