Daily Market Trend Guide -- Monday, September 21, 2015

MARKET REPORT                                                                        September 21, 2015

Just as the Fed event was over, the Markets were taken over purely by technical factors perfectly as expected by us in the Friday’s edition. The Markets saw a gap up opening and after opening strong and positive in the morning, it strengthened further by mid session as it formed the day’s high at 8055. However, the Markets reacted precisely at the gap that it had crated while it had a gap down opening and therefore it faced a very strong resistance at that point. It not only resisted but also failed to maintain those levels. The second half of the Markets saw itself paring bulk of its gains and it again went down to trade near its pattern resistance levels / zone of 7960-8000 levels. The Markets have so far failed to fill up the break away gap it has formed and today reacted fiercely from there. It finally managed to end the day at 7981.90, posting a net gain of 82.75 points or 1.05% while forming a sharply higher top and higher bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, SEPTEMBER 21, 2015

Though the Markets ended quite off form the high point of the day on Friday, they have once again created an “area gap”. Today, the Markets are likely to open on a modestly negative note and look for directions. The Friday’s session have seen quite large amount of short covering but at the same time, it would be equally important to see if this is followed up by fresh buying. With this being expiry week, the Markets will remain dominated with rollover centric activity with some bias towards the Markets attempting to find bottoms in this broad trading range.

For today, the levels of 7995 and 8055 will act as immediate resistance levels for the Markets. The supports come in at 7930 and 7850 levels.

The RSI—Relative Strength Index on the Daily Charts is 50.2099 and it has reached its highest value in last 14-days which is bullish. It does not show any bullish or bearish divergence on the Charts. The Daily MACD is bullish as it continues to trade above its signal line. On the Weekly Charts, the Weekly RSI is 43.1715 and it continues to remain neutral as it shows no bullish or bearish divergence or any failure swings. The Weekly MACD remains bearish as it trades below its signal line.

On the derivative front, the NIFTY September futures have added over 2.97 lakh shares or 1.38% in Open Interest. This mildly indicates majority of the shorts are being covered with some more shorts coming in above 8000-levels. The NIFTY PCR stands at 1.00 as against 0.95 on Friday.

Coming to pattern analysis, the Markets have pulled back over 500-odd points from the lows of 7539.50 that it formed on September 08^th 2015. However, that being said it has continued to resist at the 7960-8000 range first and then to the “gap” that was created in the last week of August when the Markets saw a significant downsides. This breakaway gap has been a major area of resistance over and above 7960-8000 levels and the Markets have continued to resist in this area. Further, though the Markets have once again crated a higher “gap” on Friday, but this is a area gap and appeared within a formation and holds little significance. Also, it is more likely to be closed in coming session.

Overall, the Markets still continue to remain little precarious and going by the pattern analysis, some amount of weakness may still continue. Having said this, the rollovers to will effect and dominate the Markets for next couple of sessions. Also, though there are some chances of the Markets testing higher levels, it has not shown any signs so for of confirmation of bottom. Given this situation, we continue to reiterate our cautious stand on the Markets. It is advised to continue to keep purchases highly selective and limited while maintaining high degree of caution at higher levels.

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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