MARKET TREND FOR TODAY
April 09, 2013
The Markets remained extremely range bound and spent the
entire session in a capped range yesterday after modestly positive opening and
ended the day with nominal losses. The Markets opened on a modestly positive
note and gave its intraday high of 5569.20 in the early minutes of the trade.
Thereafter, the Markets headed nowhere as it spent the entire session in a very
capped range. It dipped into the negative to give a day’s low of 5537.05 in the
afternoon trade but recovered again to trade back into negative. After spending
the entire session in such capped range, the Markets finally ended the day at
5542.95, posting a nominal loss of 10.30 points or 0.19% forming a parallel bar
on the Daily High Low Charts.
Today’s analysis remains no different than yesterday. The
markets shall open on a flat to modestly
positive note and look for directions. The Markets are trading near a pattern
support after breaching 200-DMA while adding short positions and therefore it
would be crucial to see if they take support near these levels.
For today, the levels of 5510 shall act as immediate support
and the levels of 5643.43 which is the 200-DMA of the Markets shall act as
immediate resistance in case of a technical pullback.
The RSi—Relative Strength Index on the Daily Charts is
31.8062 and it has just reached its lowest value in last 14-days which is
bearish. However, it does not show any bullish or bearish divergence and trades
around nearly oversold levels. The Daily MACD continues to remain bearish as it
trades below its signal line.
On the derivative front, NIFTY Futures have once again added
over 5.44 lakh shares or 3.27% in open interest which indicates continuation of
creation of heavy shorts into the system.
From the above reading it is clear that in the over
150-point fall that we saw in last four sessions, the Markets have continuously
added open interest and this signifies creation of fresh shorts in the system.
Secondly this has also brought the Markets near its oversold levels. Having
said this, since the Markets trades near its pattern support, minor weakness
here or there, there are bright chances of a technical pullback, upto 200 DMA,
even if the Markets overall continues to
remain in a downtrend.
All and all, as mentioned, there are chances of technical
pullback, even if the Markets remains in overall downtrend as the Markets sits
on huge shorts and near its pattern support, nearly oversold. In such
circumstances, while avoiding shorts, selective purchases may be made while
very vigilantly protecting profits at higher levels. Profit protection would be
required as the Markets may see technical pullback, but still continue to
remain in a downtrend. Overall, continuation of cautious outlook is advised for
today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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