Monday, September 8, 2014

Daily Market Trend Guide -- Tuesday, September 09, 2014

MARKET REPORT                                                                               September 08, 2014
The Markets saw a robust session today as it opened strong and ended ever stronger after a rally. The Markets saw a nearly gap up and stronger than expected opening today. After opening on a positive note the Markets successfully maintained those gains in the first half of the session. These gains got fortified more in the second half. The Markets, after spending a sideways first half saw some more strength coming in the second part of the session. It perked up further and went on to form the day’s high of 8180.20 towards the end of the session. These levels were maintained as well and the Markets ended the day at 8173.90, posting a robust gain of 87.05 points or 1.08% while forming a higher top and higher bottom on the Daily High Low Charts.


MARKET TREND FOR TUESDAY, SEPTEMBER 09, 2014 

Since the Markets have ended the previous session near the high point of the day, technically speaking, the Markets are expected see a quiet opening but trade positive in the initial trade. Though the Markets may continue with its up move, it should be noted that the Markets trade in “overbought” territory and also in divergence with the reading given by the F&O figures over last two days.

The Markets trade in uncharted territory. The resistance can be expected at 8180 and 8215 levels. The supports come in much lower at 8110 and 8060 levels.

The RSI—Relative Strength Index on the Daily Chart is 75.0847 and it has reached the highest value in last 14-days and this is bullish. Though it does not show any bullish or bearish divergence, it trades in “overbought” zone. The Daily MACD trades above its signal line.

On the derivative front, NIFTY September futures have added over 5.04 lakh shares or 3.29% in Open Interest. This shows that there has been fresh addition of long positions with the rise in NIFTY. However, the previous two sessions had shown significant decline in the Open Positions.

Going back to pattern analysis, the Markets have attempted to break out of the rising trend line. In normal circumstances this translates into a fresh buy signal but at the same it needs to be taken note of that the Markets trade quite in “overbought” territory. This makes the Markets vulnerable to pressure from higher levels, or at least a throw back.

All and all, though the Markets have attempted a fresh breakout, we should a great word of caution. It is strongly advised to not to resort to fresh buying until profits are protected in current positions. As a matter of fact, even the defensive sectoral indices trade in “overbought” territory and this makes the Markets vulnerable to throwbacks, if not a correction. Overall, highly cautious outlook is advised.

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


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