Daily Market Trend Guide -- Tuesday, August 25, 2015

MARKET REPORT                                                                                   August 25, 2015

Markets witnessed total carnage and destruction following global weakness as it opened gap down and went on to post largest intraday loss since 2009. The Markets saw a gap down opening which was as such on expected lines. It did continued to trade with opening losses in a  capped range in the morning trade but real carnage intensified in the second half of the session.  The Markets not only went on to break psychological 8000 mark but went on to breach its double bottom support of 7962 levels significantly. The sell-off which lead to one of the highest FII sell-offs in recent history went on to defy all levels as the Markets went on to touch the intraday low of 7769.40. No major support was seen coming in at any point of time as the Markets finally ended the day at 7809, posting a massive loss of 490.95 points or 5.92% forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR TUESDAY, AUGUST 25, 2015

Markets have formed an extremely bearish structure breaking down violently from the neckline of the bearish Head and Shoulders formation on the Daily Charts. While this has happened, the Markets have moved past is possible measuring implications on the downside and have got highly oversold has well. Following this, we are likely to see a gap up opening in the Markets and see the Markets opening with decent gains. However, key would be to see if the Markets maintain these gains and capitalize on it as the triple bottom support of 7950-7980 zones will now act as resistance.

For today, the levels of 7910 and 7970 will act as immediate resistance for the Markets. The supports will now exist at 7750 and 7640 levels.

The RSI—Relative Strength Index on the Daily Chart is 24.5194 and it now trades in ‘oversold’ territory. It has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. The Daily MACD continues to trade below its signal line and is therefore bearish.

On the derivative front, NIFTY August futures have added over 14.56 lakh shares or 9.88% in Open Interest. This now indicates massive short positions in the Markets.

Coming to pattern analysis, the Markets have broken down after a bearish head and shoulders formation on the Daily Charts over last two sessions. The usual measuring implication would have set the targets on the downsides at 7950-8100 levels but the global turmoil added more fuel to the fire and the Markets went down much beyond that. In the process, it has also breached its triple bottom support of 7950-7980 zones and these levels are now expected to act as resistance on the upside. Today’s expected upside opening will cause the Markets to open near these levels and therefore it would be utmost critical for the 

Markets to sustain these levels and manage to remain above that.

Overall, there would be great amount of volatility that shall remain ingrained in the Markets. As mentioned, the 7950-7980 zones will continue to pose resistance and it would be imperative for the Markets to sustain the opening gains. Though great amount of shorts have been seen built up in the system, the overall structure of the Markets shall make it difficult to pose a easy recovery. While maintaining adequate liquidity, it is advised to stay away from taking any major exposures in 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

Consultant to:
www.MyMoneyPlant.co.in
+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com

Daily Market Trend Guide -- Monday, August 24, 2015

MARKET REPORT                                                                                         August 24, 2015

Following global weakness, the Indian Markets as well responded to it as it opened with a gap down and ended the day with losses though it did see some recovery in the final hours of the trade. The Markets saw itself finally breaching the neckline of the Head and Shoulders formation that we have been mentioning often in our previous editions of the Daily Market Trend Guide. The Markets saw a gap down opening amid global mess and opened nearly 1.50% gap down. It made its intraday low of 8225.05 in the early minutes of the trade and thereafter and saw itself trading in a very narrow and capped range. The Markets traded in some 25-odd points range while it also saw each of its minor recovery being sold into. However, the second half of the session; especially the last hour and half of the trade saw the Markets attempting a recovery. It recover somewhat 50-odd significant points and finally ended the day at 8299.95, posting a net loss of 72.80 points or 0.87% forming a sharply lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR MONDAY, AUGUST 24, 2015

In our previous editions of Daily Market Trend Guide, we have been mentioning of a bearish formation – Head and Shoulders – on the Daily Charts. The Markets gave a downward breach on Friday from its neckline. Unfortunately, today as well, we are set to see yet another gap down opening in the Markets. The Markets are likely to open on a significantly lower note. However, on the same lines, it should be note that India shall see a relative outperformance even in the weaker times and it is likely that the Markets tries to find its bottom after such significantly negative opening.

For today, the levels of 8205 and 8140 are likely to act as immediate supports for the Markets on Daily Charts.

The RSI—Relative Strength Index on the Daily Chart is 40.2168 and it has reached its lowest value in last 14-days which is bearish. It does not show any bullish or bearish divergence. The Daily MACD too remains bearish as it trades below its signal line. On the Weekly Charts, the Weekly RSI is 46.9134 and it is neutral as it shows no bullish or bearish divergence. Weekly MACD still remain bullish as it trades above its signal line.

On the derivative front, NIFTY August futures have added 79,550 shares or 0.54% in Open Interest. This figure is insignificant to reach any conclusion however; bulk of it came down in the last hours of the trade on Friday.

Coming to pattern analysis, the Markets have broken down from the neckline of the Head and Shoulder Formation and today as well, with the gap down opening expected, it is likely to continue with its downsides. However, if we apply the measuring implication of this formation, today’s opening is likely to coincide with it supports. Given this fact, we may see the Markets continuing to trade with opening losses in the first half of the  session but may see some resilience in the second half.

Overall, the Markets are set to see a negative gap down opening but are also likely to open at its expected supports. We can see some outperformance coming into the Markets later in the day and we might see the Markets NOT going beyond its opening losses. We will see some buying coming in at lower levels as we saw on Friday as well. However, given the uncertain current global Markets, it is advised to refrain from taking any major call 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

Consultant to:
www.MyMoneyPlant.co.in
+91-98250-16331
milan.vaishnav@equityresearch.asia
milanvaishnav@yahoo.com