Friday, July 13, 2012

Daily Market Trend Guide -- Friday, July 13, 2012

MARKET TREND FOR TODAY                                                                      July 13, 2012
The Markets had an disappointing session yesterday as the Infosys numbers further weakened the sentiment which as anyway likely to get affected by unfavorable technicals. The markets have been having a contradictory reading on the Daily and Weekly Charts as mentioned in our Monday’s edition of Daily Market Trend Guide and this has remained responsible for the jitters that we have seen in the entire week that has gone by. Yesterday, the Markets opened lower, gave its intraday low of 5217.70 and recovered a  bit to end the day at 5235.25, posting a net loss of 71.05 points or 1.34%. It has formed a sharply lower top and lower bottom on the Daily High Low Charts.

Today, we are likely to see a moderately lower opening in the Markets, but yesterday’s  quantum and pace of fall is likely to get arrested and we may see some respite from the weakness that we saw yesterday. The Markets are still within a broad trading range with no negative breach and we are likely to see a range bound and little volatile trade today and the intraday trajectory would continue to play a critical role in deciding the trend.

Today, the levels of 5268 and 5295 shall act as immediate resistance on the Charts and the levels of 5310 and 5272 shall act as immediate supports.

The lead indicators show some weakness on the Charts  which can be visible in the opening trade. The RSI—Relative Strength Index on the Daily Chart is 51.5392 and it has reached its lowest value in last 14-days which is bearish. Also, the RSI has given a new 14-day low but the NIFTY has not yet, and this is bearish divergence. The Daily MACD, however, remains bullish as it trades above the signal line.

Having said this, this reading has come due to a gap down opening in the Markets and closing little above the day’s low.  Further to this, a lot of fresh shorts have been initiated in the Markets as this is clearly evident from the rise in Open Interest in NIFTY and Stock futures.
The Markets are likely to remain in broad trading range. There is no negative breach on the Charts as yet so no reason on the Charts to open shorts. At the same time, selective purchases may be made. However, profits, wherever available, needs to be vigilantly protected. Overall, cautious outlook with tinge of optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,

Wednesday, July 11, 2012

Daily Market Trend Guide -- Wednesday, July 11, 2012

MARKET TREND FOR TODAY                                                       July 11, 2012
The Markets saw a bit spurt yesterday in the second half of the session as it once again attempted to give a break out on the upside as it reversed the Monday’s losses and ended the day with decent gains. The Markets opened on moderately positive note and traded with capped gains for the major part of the session. The Markets, however saw a big spurt in the last hour and half of the session as it not only tried to give a upward breakout as it gave its day’s high of 5348.55, but it also maintained those levels as it ended the day at 5345.35, posting a decent gain of 70.20 points or 1.33%. The volumes traded remain slightly on the higher side of the average. It has formed a higher top and higher bottom on the Daily High Low Charts.

Though the Markets have attempted to give a upward breakout, it is expected to open again on a mildly negative note and consolidate again. The lead indicators suggests that the Markets will consolidate a bit more before it gives a sustainable breakout. The intraday trajectory, therefore, would again remain critically important as it is likely to dictate the trend for today.

The levels of 5360 and 5390 shall act as immediate resistance on the charts whereas, the levels of  5290 and 5265 are expected to act as supports.

The RSI—Relative Strength Index on the Daily Chart is 67.9631 and it does not show any failure swing. However, the NIFTY has given its 14-day high while the RSI has not, and this is Bearish Divergence. The Daily MACD, however, continues to trade above its signal line.
The NIFTY and Stock Futures too have continued to end the day adding in net open interest. Therefore, fresh longs have been added and no major unwinding at higher levels is seen.

However, given the reading of the lead indicator, there are very clear chances that the Markets continues to consolidate again, before giving a clear sustainable up move. There are chances that we see the Markets mildly correcting or consolidating in a range again, and therefore minor bouts or minor phases of profit taking many not be ruled out. This is also likely to keep the Markets in a range, and also bit volatile.

All and all, though there is no structural sign of a weakness on the Charts, mild consolidation cannot be ruled out. However, again, shorts should strictly be avoided but at the same time, profits should be protected wherever necessary. Also, selective purchases may be made as the overall bias continues to remain on the upside. Overall, cautious optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,

Monday, July 9, 2012

Daily Market Trend Guide -- Monday, July 09, 2012

MARKET TREND FOR TODAY                                                     July 9, 2012
Markets continued to consolidate on Friday too, but also , at the same time, continue to show resilience as it ended the day with moderate losses after a weak start. The Markets opened on a negative note and soon gave its intraday low of 5287.75 in the morning trade in the early hours of the session. Thereafter, it slowly transformed itself into rising trajectory and recovered most of its opening morning losses by late afternoon trade and traded flat. It came off again a bit in the last hour of the trade again to recover and finally end the day at 5316.95, posting a moderate loss of just 10.35 points or 0.19%. It has formed a parallel bar with almost similar top and similar bottom on the Daily High Low Charts. The Markets have ended the week with net gains of 38.05 points or 0.72%.

Today, expect the Markets to open on a moderately negative note and look for directions. The Daily charts suggests the consolidation to continue whereas, the Weekly Charts clearly point towards continuing up move and upward bias. Given this reading on the technical charts, the Markets are set to witness continuing consolidation on daily basis, but are set to have a buoyant week ahead.

For today, the levels of 5330 and 5365 are immediate resistance levels on the Charts whereas the levels of 5275 and 5230 are immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 68.9438 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continues to remain bullish as it trades above its signal line. On the Weekly Charts, the RSI is 56.9370 and it has reached its highest  value in last 14-weeks which is bullish. The RSI has set a new 14-week high whereas NIFTY has not yet and this is Bullish Divergence. The Weekly MACD too is bullish as it trades above its signal line.

Further to this, the NIFTY and Stock Futures have continued to add in Net Open Interest showing a upward bias and the NIFTY PCR stands at 1.21, leaving a significant gap on the upside.

From the above reading, it can be fairly concluded that given the structure and the reading of the lead indicators on the Daily Charts, the Markets may continue to see the consolidation in the early part of the week. At the same time, the Weekly charts clearly show the potential of the further up move post this consolidation.

All and all, the intraday trajectory would be important as the consolidation continues. Due to this, range bound movement can be seen and some intraday profit taking bouts cannot be ruled out. Further to this, given the reading on the Weekly Charts, shorts should strictly be avoided. While protecting profits on the upward bouts, selective purchases can be continued to be made. Overall, positive but  cautious optimism is advised for today as well as for coming week.

Milan Vaishnav,
Consulting Technical Analyst,