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Thursday, July 17, 2014

Daily Market Trend Guide -- Thursday, July 17, 2014

MARKET REPORT July 17, 2014

After remaining range bound with capped gains for most part of the session, the Markets saw a sharp spurt in the last hour of the trade mostly led by banks to end the day with decent gains. The Markets opened on a positive note and remained positive throughout the session. It spent the first half of the session in a capped range while it formed the intraday low in the early afternoon trade at 7532.45 when the Markets traded nearly flat with minor gains. This sidewards movement continued much until late afternoon trade. It was just last hour of the trade that saw a sharp spurt. The Markets formed its intraday high of 7640.10 in a nearly parabolic rise. It maintained those levels until close and finally ended the day at 7624.40, posting a decent gain of 97.75 points or 1.30% while forming a higher top and higher bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

Today expect the Markets to open on a flat and quiet note and look for directions. As the pattern analysis suggests, the Markets have avoided a negative breach below 7500 levels by staging a smart pullback. However, it continues to remain in a broad trading range with unclear directional bias. Today, the intraday trajectory would continue to remain important but bout of profit taking at higher levels cannot be ruled out.

For today, the levels of 7655 and 7690-7700 levels would act as resistance for the Markets. The supports exist lower at 7560 and 7500 levels.

The RSI—Relative Strength Index on the Daily Chart is 55.76 and it is neutral as it shows no bullish or bearish divergence or any kind of a failure swing. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY July futures have added over 1.64 lakh shares or 1.14% in Open Interest. This shows some fresh built up of long positions yesterday. Though this addition of OI cannot be called significant.

Going by the pattern analysis, as mentioned earlier, the Markets have avoided a negative breach below 7500 levels by taking support very near to its 50-DMA. However, with the technical pullback, the Markets are back in a trading range. For coming couple of sessions, the Markets would continue to trade in a range in a bit volatile manner until it establishes a clear directional bias.

All and all, given the overall condition and structure of the Charts, we advice to adopt highly stock specific approach. Fresh purchases should be very selective and should be kept limited to defensives and high beta stocks and short position should be avoided. While continuing to maintain liquidity cautious optimism is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Wednesday, July 16, 2014

Brief Market Forecast for the Day -- Wednesday, July 16, 2014

We have not been able to come up with regular edition of Daily Market Trend Guide in PDF Format. We reproduce Market Forecast for the Day in brief below. Inconvenience caused is sincerely regretted.

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BRIEF MARKET FORECAST FOR THE DAY

The Markets yesterday saw a initial decline after opening on a stronger note and in the mid afternoon trade saw itself trading well below the critical levels of 7500. However, the second half saw a sharp recovery coming in and the markets finally ended the day above its critical levels of 7500.

For today, expect the Markets to open on a mildly positive note and continue with its up move. The Markets have entered the trading range again and so long as it maintains the levels above of 7500, weakness is not likely to creep it.

For today, the levels of 7540 and 7565 would act as immediate resistance for the Markets. The support exists at 7500 levels. Any dip below this will once again induce some weakness in the Markets.

All and all, so long as the Markets maintains levels above of 7500, very selective purchases may be made while vigilantly protecting profits at higher levels. While maintaining liquidity cautious optimism is advised so long as Markets maintains levels above of 7500.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Tuesday, July 15, 2014

Brief Market Forecast for the Day - Tuesday, July 15, 2014

We have not been able to come up with regular edition of Daily Market Trend Guide in PDF Format. We reproduce Market Forecast for the Day in brief below. Inconvenience caused is sincerely regretted.

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BRIEF MARKET FORECAST FOR THE DAYExpect the Markets to open on a mildly positive note following global stability and look for directions. It is important to note that any up move shall face resistance near 7500 levels. So long as we continue to trade below 7500 levels, the chances of the correction continuing are larger.

The RSI on Daily Chart is 44.1411 and it has reached its lowest value in last 14-days which is bearish. Although it does not show any bullish or bearish divergence. The Daily MACD continues to trade below its signal line and is bearish.

In order to curtail the weakness, the Markets will have to move past the levels of 7500 and trade above that. If the Markets successfully does that, it will return to consolidation stage. However, trading of Markets below the levels of 7500 is likely to induce weakness with levels of 7400 acting as support. Overall, while remaining light on the overall exposure, continuance of caution is advised for today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331

Monday, July 14, 2014

Daily Market Trend Guide -- Monday, July 14, 2014

MARKET REPORT July 14, 2014

After taking support near its critical support levels of 7500 twice on Friday, the Markets slipped further to give a negative breakdown and to end the day with decent losses. The Markets opened on a positive note and after forming its day’s high of7625.85 in the early minutes of trade, it traded in a sideways range initially. However, early afternoon trade saw it drifting into the red as the Markets rapidly lost ground to touch the levels of 7500. It attempted a minor pullback while taking support at these levels but at this did not sustain much as the Markets saw continued selling pressure on itself. It went on to touch the levels of 7500 again and even drifted below that to form the day’s low of 7447.20. No recovery was seen from these levels and the Markets ended the day at 7459.60, posting a loss of 108.15 points or 1.43% while forming a lower top and lower bottom on the Daily High Low Charts.

MARKET TREND FOR TODAY

The Markets have breached it’s important support levels of 7500 on Friday. Today the Markets are likely to open on a flat note but its behaviour vis-à-vis the levels of 7500 would be very critical today. We had often mentioned in our previous editions of Daily Market Trend Guide that the Markets remain precariously overbought on Weekly Charts and this week saw one of the worst weekly losses in recent months. Any technical pullback might witness resistance near 7500 levels today.

For today, the levels of 7500 and 7545 would act as immediate resistance for the Markets. In case of Markets drifting lower, the levels of 50-DMA, i.e. 7386 may be tested which may act as support on lower levels.

The lead indicators continue to paint a bearish picture. The RSI—Relative Strength Index on the Daily Chart is 44.4735 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. The Daily MACD is bearish as it trades below its signal line. On the Weekly Charts, the RSI is 65.5996 and it has just crossed below its topping formation which is bearish. Although it does not show any failure swings or any bullish or bearish divergence. The Weekly MACD still continues to trade above its signal line. On the Candles on the Weekly Charts, an engulfing bearish line has occurred. The engulfing bearish pattern is bearish if it appears during an uptrend, which appears to be the case with NIFTY. This markets a possible reversal of trend.

On the derivative front, the NIFTY July futures have added a nominal 86,800 shares or 0.64% in Open Interest. This shows that despite such fall some minor shorts have appeared to have been added. The NIFTY PCR stands at 0.66.

Going by the pattern analysis, as mentioned earlier the Markets were trading in a broad 7500-7700 trading range. On Friday, the Markets have breached the levels of 7500 and therefore we may see some more weakness creeping in. If the Markets drifts lower, it is likely that it tests its 50-dma levels. Any upside should encounter some resistance near 7500 levels.

Overall, going purely on technical grounds the Markets may see some more weakness creeping in since it has breached the support levels of 7500. However, given the F&O data, some technical pullback is possible but it is likely that it encounters resistance at 7500 levels. This translates into possibility of a range bound session and volatility is likely to remain ingrained. It is advised to avoid creating any fresh positions and protect profits on either side. Liquidity should be preserved until directional bias is clear. Overall, caution and restrain is advised in the Markets today.

Milan Vaishnav,

Consulting Technical Analyst,

+91-98250-16331