Daily Market Trend Guide -- Thursday, December 04, 2014

MARKET REPORT                                                                                December 04, 2014

The Markets continued to see range bound consolidation as it ended the day with minor gains after moving in either direction. The Markets saw a flat opening and it traded in a very narrow and capped range in the morning session. After trading in sideways trajectory in the morning, the Markets saw some up move and saw itself touching the day’s high of 8546.95 in the afternoon trade. The Markets saw some amount of volatility creeping in once again as the Markets pared all of its recovery and traded flat. It saw some up move again in the late afternoon trade but did not see any runaway rise as well. Markets saw itself continuing to trade in a sideways trajectory in a much capped range and it finally ended the day at 8537.65, posting minor gains of 12.95 points or 0.15% while forming a slightly lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR THURSDAY, DECEMBER 04, 2014

The Markets are not completely out of the woods as yet and they continue to trade below the pattern resistance levels on the Daily Charts. We are expected to see modestly negative opening once again and there are technical chances of the Markets seeing some weakness for the immediate short term. In case of up moves, the levels of 8550-8575 zone would continue to pose resistance to the Markets.

The levels of 8550 and 8575 would act as immediate resistance for the Markets. Levels of 8430 and 8375 would continue to act as immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 66.6763 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD is bearish as it now trades below its signal line.

On the derivative front, NIFTY December futures have shed further 8.78 lakh shares or 4.11% in open interest. This continue to show that there has been consistent unwinding of long positions in the Markets.

Taking a cue from pattern analysis, the Markets continue to trade below its pattern resistance zone of 8550-8575 levels. So long as the Markets trade below these levels there are clear chances of it remaining weak. For a fresh up move to occur, the Markets will have to move past these levels with conviction and volumes. Until this happen, we continue to live with possibility of some short term correction.

Overall, speaking purely on technical ground, the Markets are prone to some short term correction. Pattern analysis show clear possibility of this and the F&O data second this reading. Given this technical condition of the Markets, it is strongly recommended to refrain from aggressive purchases. While remaining exposed to only select defensive stocks, liquidity should be maintained. Tight vigil over existing profits along with cautious outlook is advised for the day.

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

Daily Market Trend Guide -- Wednesday, December 03, 2014

MARKET REPORT                                                                                December 02, 2014

The Markets had a capped but volatile session as it reacted to the RBI Credit Policy which was more or less an non-event much on expected lines. The Markets opened on a modestly negative note and traded in a capped range in the morning trade. It saw a sharp decline while reacting to the RBI Credit Policy which kept the rates unchanged. Soon after forming a day’s low of 8504.65, it saw equally sharp recovery. It recovered all of its gains and the Markets also traded in positive territory for a very brief period while it formed its day’s high of 8560.20. However, the Markets did not sustain this recovery and slipped again. It spent rest of the session in a capped but falling trajectory and finally ended the day at 8524.70, posting a net loss of 31.20 points or 0.36% while forming a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, DECEMBER 03, 2014

Markets will have a critical session on Wednesday. Expect the Markets to once again open on a modestly negative note and continue with its corrective activities. In our previous edition, we had mentioned that any dip below 8540 levels would induce some weakness. Since the Markets have closed below this levels, it will see some more weakness if it continues to trade below this level. If the Markets move past this level again, it would put itself once again in consolidation stage.

The levels of 8540-60 zone and 8635 would act as immediate resistance for the Markets. The supports come in at 8430 and 8375 would act as immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 65.8757 and it has reached its lowest value in last 14-days which is bearish. The RSI has formed a fresh 14-period low whereas NIFTY has not yet and this is Bearish Divergence.  The Daily MACD has reported a negative crossover and it is now bearish as it trades below its signal line.

On the derivative front, the NIFTY December futures have shed over 5.50 lakh shares or 2.51% in Open Interest. This clearly signifies that there has been shedding  / unwinding of positions at higher levels from the Markets.

Returning to pattern analysis, the Markets has once again fallen below the rising trend line of the Broadening Formation. In other words, the breakout that the Markets have attempted has failed and it is once again trading below the rising trend line. In our couple of previous editions, we have also mentioned that Broadening Formations are least useful formation in establishing clear breakouts in the Markets as it has a upward rising trend line which keeps taking the breakout price higher every day. Until the Markets move past the levels of 8560, we would continue to see temporary weakness in the trade.

Overall, we will continue to see corrective activities in the Markets in the immediate short term. In event of any up moves we would also see some volatility creeping in which can result into intermittent profit taking bouts. It is continued to be advised to refrain from blanket purchases and keep overall exposure in the Markets curtailed. While going long with very selective purchases, overall, liquidity with cautious approach is advised for the day.

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

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

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Daily Market Trend Guide -- Monday, December 01, 2014

MARKET REPORT                                                                  November 28, 2014

Markets on Friday continued to surge ahead attempting a fresh breakout once again as it opened positive, strengthened further and ended the day with decent gains. The Markets saw a positive opening and after this, went on to post new highs gradually. It formed its intraday high of 8617 in the late morning trade. The afternoon session saw the Markets maintaining those gains in a steadfast manner. Going ahead in the afternoon session, some minor paring of gains was maintained as the Markets saw a minor retreat from intraday highs. However, not much of the gains were pared and the Markets finally ended the day at 8588.25, posting a net gain of 94.05 points or 1.11% while forming a higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, DECEMBER 01, 2014 

The Markets have once again attempted a breakout on the upside but not trade overbought again. Expect the Markets to open on a quiet note and also expect it to trade mildly positive in the initial trade. However, given the technical structure, some amount of profit taking from higher levels just cannot be ruled out as the current up move is fuelled by liquidity.

The levels of 8620 and 8645 would act as immediate resistance for the Markets. The supports would come in at 8510 and 8460 levels.

The RSI—Relative Strength Index on the Daily Chart is 73.6449 and it shows no failure swing. However, it trades in “overbought” area and also shows Bearish Divergence as the RSI has not posted a fresh 14-period high whereas the NIFTY has. The Daily MACD trades bullish above its signal line. On the Weekly Charts, the Weekly RSI is 74.9885. It is bullish as it has reached its highest value but it also trades in “overbought” area. The Weekly MACD is bullish but this too now is “overbought”.

On the derivative front, the NIFTY December futures have added yet another over 12.75 lakh shares or 6.09% in Open Interest. This clearly shows that there has been addition of fresh longs in the system .

Coming to the pattern analysis, the Markets are now trading at a major pattern resistance levels on the Weekly Charts. The Markets can face stiff resistance near 8600-8630 range. The Markets may move past these levels driven by liquidity but this would be extremely unhealthy for the Markets, at least technically speaking. There are strong chances that the Markets face resistance some selling bouts, though intermittently, at higher levels. The Markets are overbought on Daily Chart and on the Weekly Charts as well. 

Given this technical reading, there are strong chances that we might see intermittent selling bouts even if the Markets continue to remain fuelled by liquidity. It would be of extreme importance that one keeps protecting profits at higher levels. Up moves, with this structure of the Charts, cannot be taken for granted and therefore fresh positions should be taken with extremely caution and on highly selective basis.

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