Wednesday, May 22, 2013

Daily Market Trend Guide -- Wednesday, May 22, 2013

MARKET TREND FOR TODAY                                                                       May 22, 2013
The Markets showed first clear signs of impending correction as it ended the day with losses amid greatly volatile session. The Markets opened on a flat note and after trading briefly in the green, it slipped into the negative territory and continued to drift lower while forming a falling channel on the intraday charts. The Markets traded at a low point of the day by the mid session. However, the afternoon trade saw a very sharp spurt as the Markets saw a sharp rise of over 60-odd points from the day’s low. It not only recouped all of its morning losses but traded in the green and went on to give the day’s high of 6180.25. However, this spurt was not sustained. It remained short lived as after deliberating for a while near the high point of the day, the Markets saw equally sharp paring of gains. It dipped into the red giving the day’s low of 6102.35. It finally ended the day at 6114.10 posting a net loss of 42.80 points or 0.70%.


Today’s opening would be crucial for the Markets. The Markets have ended the day very near to its pattern support levels of 6095. The Markets are expected to open flat and it would be critical to see if they are able to maintain the levels above 6095. Any dip below 6095 may see some temporary weakness and corrective activity continuing in the Markets.

For today, the levels of 6135 and 6160 shall act as immediate resistance on the charts and supports still come in much lower at 6095 and 6020 levels.

The lead indicators are neutral. The RSI—Relative Strength Index on the Daily Chart is 61.1136 and it is neutral as it shows no negative divergence or failure swings. The Daily MACD continue to trade above its signal line.

On the derivative front, NIFTY May futures have added very negligible 1.94 lakh shares or just 0.75% in open interest. This signifies that the spurt we saw in the mid session can be due to heavy short covering and at the same time, it can also be observed that no major shorts were created in the Markets on its way down either in the last hour and half of the trade.

Overall, the Markets continue to remain in the corrective mode. The Markets may find some temporary support at its pattern support levels of 6095 but any breach of this levels will see the Markets continue to correct and we may continue to see volatility of the kind we saw today ingrained in the trading session.

All and all, we continue to reiterate that the Markets have seen correction set and the levels of 6199 have become a temporary top for the Markets. Fresh sustainable up move shall occur only when the Markets moves past this level again. Also, there are no triggers as to suggest that the Markets have found some bottom and may reverse. In case of consolidation, defensives shall continue to out perform. A very selective approach in taking fresh positions with guarding of profits on either side with cautious outlook is advised for today.

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

   

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