Thursday, December 22, 2016

Daily Market Trend Guide -- Thursday, December 22, 2016

MARKET TREND FOR THURSDAY, DECEMBER 22, 2016
The Markets had a disappointing session as it failed to maintain its modest gains and ended with modest losses for the sixth day in a row. The NIFYT came off from its modest highs in the last hour of the trade ending with losses. Today as well, we continue to expect the session to remain lackluster and we will see NIFTY moving around in a capped range. With holiday season weighing around, the volumes too are expected to remain thin and the 200-DMA level which is 8238 will continue to remain key resistance for the NIFTY in the immediate short term.

For today, the levels of 8115 and 8180 will remain immediate resistance levels for the Markets. The supports come in at 8030 and 7980 levels.

The RSI—Relative Strength Index on the Daily Chart is 39.9257 and no failure swings are observed. The NIFTY has formed yet another fresh 14-period low while RSI has not yet. This has shown “Bullish Divergence” for the second day in a row. The Daily MACD remains bullish as of now as it trades above its signal line. However, if such trend continues, we might see it reporting negative crossover. No significant formations on Candles are observed.

On the derivative front, the NIFTY December series have gone on to shed yet another 1.31 lakh shares or 0.91% in Open Interest. This makes evident that reduction / offloading of positions has continued though with a lesser ferocity.

While having a look at pattern analysis, the NIFTY has  so far held on to the recent lows made at 7928. However, while it has attempted to confirm this bottom and mark a reversal, it has not done so today. Though this bottom stands protected, it does not stand confirmed. The very fact that the NIFTY has failed to sustain above 200-DMA, makes it vulnerable to some more continued weakness in immediate short term.

However, the fact that retracements are come in on much lower volumes should not be ignored. There are chances that the NIFTY may continue to see such modest declines but also now start seeing intermittent pullbacks from higher levels as it still trades above its key supports and these key supports have not been broken as yet. We continue to advise to refrain from creating any major directional exposures. Some pockets like IT, ENERGY, and select CNXMID50 stocks are likely to out-perform.

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com


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