Monday, October 14, 2013

Daily Market Trend Guide -- Monday, October 14 2013

MARKET  REPORT                                                                                          October 14, 2013
The Markets had a overall buoyant session on Friday as it opened on a stronger note and then spent the entire session in a sideways 30-odd points range to end the day with decent gains. The Markets saw a good opening on back on Infosys numbers which were in line with markets expectations. The Markets opened positive and in the late morning trade, it went on to give the day’s high of 6033.95. Thereafter, it remained in sideways trajectory for the rest of the session. It remained in a narrow 30-odd points range until the end of the session and finally ended the day at 6096.20, posting a net gain of 75.25 points or 1.25% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TODAY
We are likely to open and begin week on a flat note. It is time that the Markets are expected to consolidate before it moves up further. Technical charts very clearly suggest that we would again see some consolidation or minor correction from these levels. Weak IIP data that came out later on Friday would contribute to this. Further we have a truncated week as Wednesday is a trading holiday on account of Bakri Id.
For today, the levels of 6130 would act as major resistance levels for the Markets. The supports come in much lower at 6020 and 5965 levels.
The RSI—Relative Strength Index on the Daily Chart is 65.4167 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence.  The Daily MACD remains bullish as it trades above its signal line. On the Candles, there are signs again of forming a potential top. On Candles, A hanging man occurred (a hanging man has a very long lower shadow and a small real body).  This pattern can be bullish or bearish, depending on the trend.  If it occurs during an uptrend (which appears to be the case with NIFTY) it is called a hanging man line and signifies a reversal top.
On the Weekly Charts, RSI is 59.3236 and it has reached its highest value in last 14-weeks. The Weekly MACD continues to trade above its signal line.
On the Derivative front,  NIFTY October futures have over 9.71 lakh shares or over 5.76% which is certainly a positive sign.
Given all the reading above, if we read the lead indicators and the F&O data, it surely suggests that the Markets have got the steam left on the upside. However, if we rely on pattern analysis which is equally or even more important, it suggests that the Markets are nearing its major resistance levels and we are all and more likely to see some consolidation or some minor profit taking coming in from these levels.
All and all, it can fairly be concluded that we might see some consolidation taking place. Further, as mentioned, weak IIP numbers are likely to contribute to this. Under such a structure of the Charts and Markets, we would advice to refrain from creating aggressive positions while avoiding shorts. Any profits that exist should continued to be vigilantly protected. Overall, cautiously positive outlook is advised for today.

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



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