MARKET TREND FOR TODAY
January 16, 2013
The Markets have attempted a breakout yesterday as it spurt
up in the last hour and half of the trade to close above the upper band of the
trading range to end the day with modest gains. The Markets opened on a mildly
positive note and traded in a capped range for the most part of the session.
The Markets spent more than half of the trading session in a narrow 20-odd
points range and in the afternoon trade, briefly dipped into the red as it gave its intraday low of 6018.60. However, in
the last hour and half of the trade, the Markets saw a sharp pullback, mixed
with some short covering and some buying, went on to give the day’s high of
6068.50. It finally ended the day at 6056.60, posting a modest gain of 32.55
points or 0.54% while forming a higher top and higher bottom on the Daily High
Low charts.
Today’s session would be crucial for the Markets. The
opening of the Markets and its behaviour vis-à-vis the levels of 6040-6050
shall decide if the Markets shall continue with its up move or again continue
to consolidate. The opening today is expected to be on mildly negative to flat.
The Markets will have to remain above the levels of 6045-6050 in order to
continue with the upward breakout that it has attempted yesterday.
For today, the levels of 6065 and 6095 are expected to act
as resistance and the supports come in much lower at 5990 and 5950 levels.
The lead indicators and F&O data show mixed and little
contradictory signals with mild possibility of the Markets consolidating before
giving a runaway rally. The RSI—Relative Strength Index on the Daily Chart is
67.2466 and it does not show any failure swings. However, NIFTY has set a new
14-day high whereas RSI has not and this is a BEARISH DIVERGENCE. However, on
the other hand, Daily MACD has just reported a positive crossover and is now
bullish as it trades above its signal line.
On the derivative front, NIFTY January futures have shed
over 4.36 lakh shares or 2.74% in Open Interest. This signifies that the spurt
that we saw in last hour and half of the trade was more on account of short
covering than fresh buying.
All and all, it would be important to see if the short covering
that we saw yesterday translates into fresh buying today. For the Markets to
continue with its up move, it would be important for it to remain and trade
above 6050 levels. Until this happens, it can continue to consolidate, but the
undercurrent remains certainly buoyant. While strictly avoiding shorts,
selective approach to the Markets is advised with cautious optimism.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.