Daily Market Trend Guide -- Monday, May 02, 2016

MARKET TREND FOR MONDAY, MAY 02, 2016

Though the Markets oscillated in a 80-odd points on Friday, it remained in a corrective mode, much on analyzed lines. Today as well, the Markets are likely to see a negative opening and is likely to open well below its 200-DMA which stands at 7850 today. The Markets will confirm its signs of fatigue that it had been displaying over past couple of days and this will keep the short term top of 7978 sacrosanct at least in the immediate short term.

For today, the levels of 7875 and 7920 will act as immediate resistance levels of the Markets. The supports come in much lower at 7760 and 7680 levels.

The RSI—Relative Strength Index on the Daily Chart is 57.4671 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD has reported a negative crossover as we had expected in our previous edition and it is now bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 53.5804 and this too remains neutral as it shows no bullish or bearish divergence. The Weekly MACD stays bullish as it trades above its signal line.

On the derivative front, the NIFTY May futures have added over 5.25 lakh shares or 2.61% in Open Interest. The NIFTY PCR stands at 0.94 as against 0.92.

While having a look at pattern analysis, the Markets attempted to move past its 200-DMA but failed to give a clear breakout after that. It has oscillated some 150-odd points while forming an intermediate top at 7978 after failing to clear this level twice. On the Weekly Charts, not breakout has been attempted. Returning to Daily Charts, today’s expected negative opening is likely see the Markets opening below its 200-DMA levels and this level will now continue to act as resistance for the Markets. No significant strength can be expected from the Markets until it moves past its 200-DMA and clears the intermediate top that it has formed. In event of weakness continuing, it would not be a surprise if the Markets test 7700-7750 levels.

Overall, the Markets have started to confirm all the signs of fatigue that it has been displaying over last couple of days. There are bright chances that we see some more weakness lingering in the Markets. Any fresh exposures should be kept limited to the defensives while keeping overall purchases limited. Until the critical resistance levels are cleared, all the up moves should be utilized for booking profits at higher levels.

Milan Vaishnav,

Consulting Technical Analyst

Member: Market Technicians Association, (MTA), USA

Member: Association of Technical Market Analysts, (ATMA), INDIA

www.EquityResearch.asia

http://milan-vaishnav.blogspot.com

+91-98250-16331

milan.vaishnav@equityresearch.asia

milanvaishnav@yahoo.com