Monday, December 1, 2014

Daily Market Trend Guide -- Tuesday, December 02, 2014

MARKET REPORT                                                                            December 01, 2014
The Markets halted its three-day gaining streak as caution reigned in ahead of RBI Credit Policy tomorrow. The Markets saw positive opening and after trading flat in the initial trade, strengthened further to post the day’s high of 8623 in the late morning trade. However, it retreated in the remaining part of the session. After posting this fresh lifetime high, the Markets saw slow paring of gains in the first half of the session. It traded flat by afternoon as it pared all of its morning gains. The late afternoon trade saw some pressure coming in, as such on expected lines, as the Markets dipped into the negative. It weakened further as it went on to form the day’s low of 8545.15. It came off nearly 80-odd points from the high point of the day and finally settled at 8555.90, posting a net loss of 32.35 points or 0.38% while continuing to form higher top and higher bottom on the Daily Bar Charts.


MARKET TREND FOR TUESDAY, DECEMBER 02, 2014 

The Markets continue to remain at critical juncture. We can expect a flat opening tomorrow and may trade in a capped range ahead of RBI Announcements and react to it after that. As such no rate cuts are expected but it would be technically important for the Markets to trade above 8540 levels. If it dips below this, it may induce some short term weakness in the Markets.

The levels of 8600 and 8630 would act as immediate resistance. The supports come in at 8540 and further down at 8430 levels.

The RSI—Relative Strength Index on the Daily Chart is 69.6175. It has moved below from topping formation and this is bearish. It otherwise remains neutral with no failure swings or any bullish or bearish divergence. The Daily MACD continues to trade above it signal line.

On the derivative front, the NIFTY December futures have shed over 2.69 lakh shares or 1.21% in Open Interest. This signifies some unwinding of long positions from higher levels.
Going by the pattern analysis, the Markets have taken a very immediate support on the rising trend line that it attempted to break on the upside. However, any dip below the levels of 8540 is likely to induce some immediate weakness in the Markets. The lead indicators, read along with F&O data show some tilt towards this situation.

Overall, we continue to reiterate caution in the Markets. Given the current state of Technical Charts, its lead indicators, derivative data, it would be absolutely wise to concentrate on protecting current profits. While keeping purchases very limited and highly selective, liquidity should be maintained as selling bouts and minor but sharp cannot be ruled out even if we have the overall trend intact. 

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

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