MARKET REPORT January
07, 2014
Markets continued to have a range bound correction session
yesterday wherein it opened negative and spent the entire session in a 30-odd
point range to end the day with modest losses. The Markets opened on a modestly
negative note as expected and spent the morning session in a very narrow range.
In the late afternoon trade, the Markets gave up bit more as it went on to give
the day’s low of 6170.25. The Markets hovered around those levels for while but
managed to recover from those levels. It saw some recovery coming in the last
hour of the trade. The Markets recovered and finally managed to end the day at
6191.45, posting a modest loss of 19.70 points or 0.32% while forming a
Parallel Bar – similar top and bottom on the Daily High Low Charts.
MARKET TREND FOR TODAY
Once again, the analysis for today remains similar as that
of last two days. The Markets have managed to hold on to the support of 50-DMA
at Close levels since last two sessions. Today, expect the Markets to open on a
flat note and look for directions. Trading of the Markets above the levels of
50-DMA and maintaining it at Close levels would continue to be of critical
importance for the Markets. The intraday trajectory would remain crucial.
For today, the levels of 6225 and 6250 are immediate
resistance on the Daily Charts. The supports exist at 6160 and 6125 levels on
the downside.
The RSI—Relative Strength
Index on the Daily Chart is 46.7182 and it has reached its lowest value in last
14-days which is bearish. Also, the RSI has formed a new 14-period low while
NIFTY has not yet and this is bearish divergence. The Daily MACD remains
bearish as it continues to trade below its signal line. However, on
Candles, an engulfing bearish pattern has occurred. If the engulfing
bearish pattern occurs during a downtrend (which appears to be the case
with NIFTY), it may be a last engulfing bottom which indicates a bullish
reversal. The test to see if this is the
case is if the next candle closes above the bottom the current (black) candle's
real body.
On the derivative front, NIFTY January futures
have added a nominal 1.55 lakh shares or 0.88% in Open Interest. We can say
that the OI has remained practically unchanged with a positive bias as it has
shown a mild increase.
Given the above reading, the lead indicators show
that we may see some mild weakness persisting in the Markets for immediate
short term. However, given the F&O data and the formation on the Candles
charts, we also see that this may be of very short term and the Markets would
continue to trade with a positive bias so long as it maintains support of
50-DMA and its filters at Close levels.
Overall, we may see the Markets range bound once
again and intraday trajectory that the Markets forms would be of critical
importance. The levels of 50-DMA would be important to watch for at Close and
volumes too would play a critical role. However, until now, the Markets will
trade with a positive bias as it has maintained its critical supports and no
major shedding of OI is seen. While avoiding shorts, modest purchases may be
made while maintaining a positive caution on the Markets.
Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331
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