MARKET TREND FOR TODAY
May 08, 2013
The Markets saw a buoyant session yesterday driven by
liquidity as it opened positive and later surged further on the upside to end
the day with gains. The Markets opened on a positive note following positive
global trend. It traded positive, but in a capped range in a sideways trajectory
in the first half of the session. However, in the second half in the afternoon,
it saw further strength as it perked up further. The Markets went on to give
the day’s high of 6050.50 towards the end of the session. It ended the day at near
the high levels of the day at 6043.55 posting a decent gain of 72.50 points or
1.21% while forming a sharply higher top and higher bottom on the Daily High
Low charts.
Technically speaking, since the Markets have ended the day
near the high point yesterday, it is likely that it opens on a positive note
again and continues with its up move, at least in the initial trade. We are
likely to see a positive opening but the intraday trajectory would continue to
be important as sustainability of the opening gains would be crucial given the
indications on the lead indicators.
For today, the levels of 6060 an 6085 are likely to act as
resistance on the Charts and the supports come in much lower at 5990 and 5955
levels.
The lead indicators show some signs of weariness in the
Markets. The RSI—Relative Strength Index on the Daily Charts is 68.2001 and it
does now show any failure swings. However, the NIFTY has set a new 14-day high
but the RSI has not. This is a BEARISH DIVERGENCE. The Daily MACD continues to
remain bullish as it trades above its signal line.
On the derivative front, the NIFTY May futures have added
over 16.80 lakh shares or 8.78% in Open Interest. This is certainly a positive
factor for the Markets as it shows continuation of creation of longs and the
rise that we saw yesterday was not on account of short covering. The NIFTY PCR
stands at 1.20 as against 1.14 yesterday.
Having said this, it is important to note that any further
continuation of up move shall take the Markets near its OVERSOLD levels. It is
also important to note that, the lead indicators have started showing the signs
of weariness in the Markets. Though it may not get reflected immediately, it
shows some indication of impending minor correction. It is also important to
note that many of the key components of the NIFTY are already trading OVERSOLD
with their lead indicator overstretched.
Keeping this in view, it sometimes happens that the Markets
continue to see up move even if the lead indicators on the technical charts
suggest otherwise. It may continue to see buoyancy for some more time as the
rally is liquidity driven, which often tends to disregard caution indicated by
the Charts. Even today, there are chances that we may continue to see the up
move, but given the overall reading, we would strongly suggest to use any
further up move as an opportunity to book profits and fresh long positions should
be avoided at this juncture. Overall, continuation of approach with high degree
of caution is advised for today.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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