Daily Market Trend Guide -- Monday, October 13, 2014

MARKET REPORT                                                                                    October 10, 2014

Global weakness took its toll on Indian Markets as well as the Markets on Friday opened on a lower note and ended the day with losses in spite of any intraday effort to recover from the lows.  The weak technical factors also played its part. The Markets saw a near gap down opening and after opening on such weaker note it traded with capped losses in the morning trade. The Markets thereafter, in the second afternoon trade made a serious attempt to recover as it recovered nearly more than half of its opening losses. However, this attempted did not yield any results as the Markets saw selling pressure returning in the late afternoon trade. It lost all of its recovery and went on to form the day’s low of 7848.45. It finally settled the day at 7859.95, posting a net loss of 100.60 points or 1.56% while again forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, OCTOBER 13,2014 

The Markets are likely to see a modestly negative to flat opening and tomorrow’s session is likely to be a sort of acid test for the Markets. The pattern support of 7815-20 levels would be crucial and the Markets will have to sustain above this in order to avoid any weakness. Any dip below this levels would be detrimental to the short term interest of the Markets and it may see some short term weakness creeping in. Little weak IIP data are likely to play its part but sustenance of 7800-7820 range would be extremely crucial.

The levels of 7910 and 7975 would act as resistance and the levels of 7800-20 and 7750 would act as supports in the near term.

The RSI—Relative Strength Index on the Daily Chart is 43.2324 and it remains neutral as it shows no bullish or bearish divergences or failure swings. The Daily MACD continues to remain bearish while it trades below its signal line. On the Weekly Charts, the RSI stands at 61.5373 and it has reached its lowest value in last 14-weeks which is bearish. Further, the Weekly RSI has formed a fresh 14-weak low but the NIFTY has not yet and this also leads to Bearish Divergence on Weekly Charts. The Weekly MACD too remains bearish while trading below its signal line.

Taking a look at pattern analysis, a distinct broadening formation continues on the Weekly Charts, more distinct than on the Daily Charts. Taking a simple cue at the trend and the moving averages, the Markets have breached its 50-DMA but has stayed within its filters as yet. However, any breach below the 7800-7820 levels would induce further weakness in the Markets making it prone to testing its 100-DMA levels. However, sustenance of Markets above the levels of 7800-7820 would keep it in range bound consolidation and trading range.

Overall, with the Weekly Charts also weaker, the Markets are unlikely to see any runaway up move unless induced by heavy short covering and other such factors. The Markets, so long as maintains levels above 7820 would remained in a broad trading range with good amount of volatility ingrained in it. It is advised to remain very light on overall exposure while maintaining enough liquidity. Moving ahead with caution is advised even when the stock specific out performance would continue.

Milan Vaishnav,

Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com