Daily Market Trend Guide -- Friday, August 14, 2015

MARKET REPORT                                                                                August 14, 2015

Markets had a tough time resisting a downward bias it ended the day with minor gains after a hugely volatile session. The Markets saw a stronger opening aided by somewhat positive sentiments following better IIP number and it formed its day’s high of 8429.50 in the morning trade. However, this euphoric opening remained short lived as the Markets gradually gave up all of its opening gains by afternoon. The Markets saw a sharp up move wherein it attempted to regain its morning highs in a sharp spurt this too fizzled out in the second half of the session. The Markets once again gave up that recover and this time dipped into the negative in the late morning trade. It formed its day’s low of 8339.75, coming off nearly 90-odd points from the high point of the day. It finally settled the day at 8355.85, posting a minor gain of 6.40 points or 0.08% while forming parallel bar on the Daily Bar Charts.

MARKET TREND FOR FRIDAY, AUGUST 14, 2015

Markets continue to hang on precariously at its 50-DMA and 100-DMA and its filters at Close levels. Expect the Markets to open on a flat to modestly positive note and attempt to stabilize and resist weakness creeping in for a potentially bearish formation on the Charts. However, for that the Markets will have to move past and trade as much above 8400-levels and upward to ward off any weakness from creeping in. Any small trigger or weakness and we will see the Markets breaching the neckline.

For today, the levels of 8390 and 8450 will act as immediate resistance levels. The supports come in bit lower at 8310 and 8240 levels.

The RSI—Relative Strength Index on the Daily Chart is 42.1362 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD continues to remain bearish as it trades below its signal line.

On the derivative front, the NIFTY August futures have shed  over 3.29 lakh shares or 2.05% in Open Interest. This shows some unwinding still continued from higher levels.

Coming to pattern analysis, the Markets continue to trade just above the neckline of the fragile Head and Shoulder formation formed on the Daily Charts. The silver lining being --- this pattern is not so classical and the 50-DMA runs along like a proxy neckline raising the credibility of the chances for the Markets to take support at these levels. It is important to note that we cannot “pre-empt” a negative breach until it actually happens and cannot act in anticipation of a negative break down. It would be imperative and crucially important for the Markets to move past the critical levels of 8450 and trade above that to ward off any potential weakness from creeping in.

Overall, the Markets are still not completely out of the woods and are prone to any downward breach on even or slightest possible trigger. However, it is also resisting any downsides and may open to attempt and trade in positive at least in the initial trade. However, until the Markets move past and trade above 8450, it will be vulnerable to selling bouts from higher levels. We continue to reiterate to maintain cautious outlook on the Markets.

Milan Vaishnav,
Consulting Technical Analyst

Af. Member: Market Technicians Association, (MTA), USA
Af. Member: Association of Technical Market Analysts, (ATMA), INDIA
www.EquityResearch.asia
http://milan-vaishnav.blogspot.com

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