Monday, May 13, 2013

Daily Market Trend Guide -- Monday, May 13, 2013

MARKET TREND FOR TODAY                                                                 May 13, 2013
Liquidity continues to push the Markets up a bit on a short session on Saturday as the Markets opened moderately negative but ended the day with moderate gains. The Markets opened on a mildly negative note and gave its intraday low of 6084.15 in the early minutes of the trade. The Markets came into positive in a short while and moved in sideways in a capped range for the most part of the session. In the end, it notched up little further to give the day’s high of 6114.55 and finally ended the day at 6107.25, posting a moderate gain of 12.50 points or 0.21% while continuing to form a higher top and higher bottom on the Daily High Low Charts.


The Markets have finally got OVERBOUGHT on the Daily Charts. Today, expect the Markets to open on a flat note and look for directions. The Markets are currently being fuelled by liquidity but correction or paring of gains from higher levels is now more imminent as it has now got overbought. Intraday trajectory would be very critically important to determine the trend for today. Slightest negative trigger on the Daily Charts will see the some profit taking coming in.

For today, the levels of 6125 and 6140 would act as resistance where as the supports come in much lower at 6065 and 6010 levels.

The lead indicators are overbought and show some weariness on the Daily Charts. The RSI—Relative Strength Index on the Daily Chart is 70.3103 and though it has reached its highest value in last 14-days, it is now in OVERBOUGHT area and can potentially top out here. It does not show any bullish / bearish divergence. The Daily MACD continues to trade above its signal line. On the Weekly Charts, the RSI is 62.3975 and has reached its highest value in last 14-days. The Weekly MACD has reported a positive crossover as it now trades above its signal line. However, speaking of pattern analysis, it now trades near its resistance levels.

On the derivative side, even on the truncated session, NIFTY May futures have not shown any significant change in Open Interest figures which remain unchanged adding just 3100 shares or 0.01% in open interest.

Making sense of all these input, on the Daily Charts, the Markets are in OVERBOUGHT condition and also continue to trade near its pattern resistance levels.  On the Weekly Charts too, it can potentially resist around these levels. In a way, even if liquidity continues to fuel the Markets, bit on the upside, making fresh purchases would be highly risky as major components of NIFTY and BANKNIFTY stands heavily OVERBOUGHT. Even if the Markets continue to show some strength, paring of gains from higher levels just cannot be ruled out.

All and all, as mentioned, the Markets are OVERBOUGHT on the Daily Charts. It often continues to defy technical indicators if it is being driven by liquidity but in the end, technicals do tend to take over. From today onwards, there are high chances that the Markets may see paring of gains and profit taking at the higher levels even if it shows initial strength. It is very categorically advised to avoid building fresh long positions and as we have been mentioning, any up move should be used in protecting profits. Overall, today’s session should be approached with  great degree of caution.

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


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.