Sunday, August 24, 2014

Daily Market Trend Guide -- Monday, August 25, 2014

MARKET REPORT                                                                                              August 25, 2014
The Markets traded on analysed lines of Friday as though it remained positive, spent the entire session in a capped range and ended the day with modest gains. The Markets opened on a modestly positive note and traded with very limited gains in the early morning trade. It saw some strength in the late morning trade as it managed to crawl up to mark the day’s high of 7929.05. In the afternoon trade, the Markets saw some paring of gains as it came of from its day’s highs. Most of the gains were pared as the Markets traded nearly flat. The second half of the session saw the Markets slightly recovering but it continued to overall trade in just 25-odd points range for the entire session. It finally managed to end the day at 7913.20, posting a net gain of 22.10 points or 0.28% while forming a moderately higher top and higher bottom on the Daily Bar Charts.


MARKET TREND FOR  25TH AUGUST 2014

The Markets are likely to again see a ranged session tomorrow. The opening might be quiet but the Markets are overall in a topping out process. Even if the Markets continue to inch upwards the overall session is likely to be a ranged session capped on upside. The volumes have continued to remain below average and therefore a concern. The intraday trajectory and the volumes would continue to critically contribute to shape the direction of the Markets in coming days.

The range of 7910-7935 and 7965 would act as immediate resistance on the Daily Charts. The supports would come in at 7855 and 7810 levels.

The RSI on the Daily Chart is 63.8013 and it has reached its highest value in last 14-periods which is bullish. However, it does not show any bullish or bearish divergences. The Daily MACD remains bullish as it trades above its signal line. On the Weekly Charts, the Weekly RSI is 69.5861 and has generated a sell signal. Though it does not show any failure swing, the NIFTY has set a fresh 14-period high while Weekly RSI has not. This shows a clear Negative Divergence on the Weekly Charts. The Weekly MACD, however, trades above its signal line. 

On the Derivative front, since the expiry week begins tomorrow, no stand along numbers would directly throw any light. However, on Friday, the NIFTY August futures have continued to shed over 3.17 lakh shares or 2.16% in Open Interest. This showed unwinding of long positions in the and some short covering as well in the August series.

Once again, going by the pattern analysis, the Markets have continued to remain in a Broadening Formation which is usually seen during a topping out process. This means that the Markets are in the process of marking a top and this can happen any time. The characteristic of this is the declining volume that we have been witnessing in many of the NIFTY components. This means, even if the Markets continue to inch upwards, it would continue to do so declining or lower volumes and will not give any runaway rise. Any such runaway sharp rise should be suspected as buying climax.

All and all, we continue on the lines of the advisory that we issued during the entire last week. To reiterate, it is advised to continue to remain very moderate on positions and the profits should be monitored and protected very vigilantly on the higher side. Purchases should be restricted and made very selectively. Even if the  short term upward move continues, the overall bias remains towards some more consolidation or impending correction. Being watchful in the Markets is advised.

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



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