MARKET REPORT December
17, 2014
The Markets had a terrible day as it went on to further
correct and tested its 100-DMA before ending the day with a deep cut. The Markets
saw a negative opening following weak technical and even weaker global cues. Post
opening on a negative note, the Markets never really attempted even once to
move upwards. It remained in a falling channel and remained in negative
trajectory for the entire session while it kept making fresh lows gradually but
consistently. Though a very mild attempt to recover from the lows of the day
was made in the late afternoon trade but weakness returned to the Markets with
even greater force as it went on to form the day’s low of 8052.60. Virtually no
attempt to recover was made from here as well and the Markets finally ended the
day at 8067.60, posting a deep cut of 152 points or 1.85% forming a sharply
lower top and lower bottom on the Daily Bar Charts.
MARKET TREND FOR WEDNESDAY, DECEMBER 17, 2014
Markets now sit at a great possibility of a technical rebound.
It has taken support at 100DMA, which is one of the major support levels and
also, at the same time, have got “oversold”. Having said this, we can expect a
positive opening in the Markets. In event of a weaker opening, we can expect
the Markets to attempt a rebound from lower levels. Until broken, the levels of
100-DMA would continue to act as major support at Close levels.
The levels of 8095 and 8140 would act at immediate resistance.
The supports would come in at 8050 and 7990 levels.
The RSI—Relative Strength Index on the Daily Chart is
29.7520 and it has reached its lowest value in last 14-days which is bearish.
However, it does not show any bullish or bearish divergence and it now trades
in “oversold” area. The Daily MACD remains bearish trading below its signal
line.
On the derivative front, the NIFTY December futures have
added over 4.03 lakh shares or 1.72% total open interest. This signifies that
there are big amounts of shorts that exists in the system.
Taking a cue from pattern analysis, the Markets have very
sharply corrected itself from a broadening formation. As we have often on
number of times that such formations are observed during major top formations.
Further, given such formation, the
Markets correction becomes imminent and this is what precisely that has
happened. After forming an immediate top of 8623, the Markets have corrected
nearly 571 pints NIFTY.
Overall, while NIFTY has corrected over 570-odd points from
its lifetime highs, the Markets now attempts to take support at its 100-DMA.
Further, over and above now trading in “oversold” area, the Markets is also
sitting on significant amount of short positions. It has kept adding to OI on its way down in almost all sessions.
Given this, it sits very favourably on possibility of a technical rebound.
Given this possibility, it is advised to now begin making selective purchases
as even in event of some weakness, a
technical rebound can be expected.
Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA
www.MyMoneyPlant.co.in
+91-98250-16331
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