Gemstone Equity Research & Advisory Services

Friday, July 1, 2011

Daily Market Trend Guide -- Friday, July 01, 2011

MARKET TREND FOR TODAY

The Markets made yet another up move at Close basis yesterday as it ended the expiry day with yet another decent gain and in the process have continued to form a higher top and higher bottom on the Daily High Low Charts.

Today, it is going to be no different with the Markets slotted to open again on a positive note and look for directions.

With the Market poised to open on a positive note again, it is likely to depend again on its intraday trajectory for its trend that would be critical given the structure of the Charts. For today, the levels of 5670 and 5690 shall act as resistance and support exists at 5580 and 5520 levels.

The lead indicators remain in place with RSI—Relative Strength Index on the Daily Charts at 63.9704. It has reached its highest value in last 14-days which is statistically bullish. The Daily MACD continues to trade above its signal line.

At this juncture, we need to draw your attention on certain important points. The Markets, especially in last 3-4 sessions have moved up on liquidity and NOT as per technicals as it has defied many technical factors. On the Charts, the DMAs (50 & 100) have reported negative crossovers in spite of the rise and also the Markets have disregarded the existence of both 50 and 100 DMA. This is one of the signs of artificial move, especially beyond the 50 and 100 DMAs. Also, during all these session, the Markets have shown a one-way rise of nearly 400 points or nearly 8% which makes the rise unsustainable and unhealthy in absence of any consolidation or correction.

All and all, it is likely that the Markets opens high but near the resistance of falling trend line drawn from 6388 levels joining 6181, and 5864 levels. After opening, intraday trajectory would thus be important. It is strongly advised to keep away from taking direct long positions in Index components as there are high chances that an investor gets trapped at such higher levels. High degree of caution is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in
+91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

Thursday, June 30, 2011

Daily Market Trend Guide -- Thrusday, June 30, 2011

MARKET TREND FOR TODAY

The Markets continued its up move on the second last day of the expiry of the current series by opening up and then trading in a capped range and closing with gains. The Markets have, in this process, formed a higher top and higher bottom on the Daily High Low Charts.

Today, we enter into the expiry day of the current June Series and the day, as like yesterday, is expected to remain largely dominated with rollover centric activities.

Today, in line with positive global markets, we may again see the Markets opening on a positive note and look for directions, largely depending on the intraday trajectory that it forms but the session, as mentioned above, will see more activities remaining rollover centric. For today, the levels of 5630 and 5645 shall act as resistance and the levels of 5540 and 5520 shall act as supports.

The RSI—Relative Strength Index on the Daily Charts is 61.1047 and it has reached its highest value in last 14-days which is bullish. It does not show any negative divergence.

The Daily MACD continues to trade above its signal line.

At this juncture, we would again point out that after the lows the Markets made on June 20th, the Markets have moved up / pulled back over 400 points or nearly 9% in consecutive sessions and this is certainly unhealthy given the fact that it did not resist to both of its 50-DMA and 100-DMA especially when both of these averages have reported a negative crossover. This clearly indicates that the up move that we saw, especially in last 2-3 sessions is momentum driven, rollover centric and in defiance of some technicals.

All and all, today we may see similar behavior in the Markets as we enter into expiry, but we continue to maintain caution against any fresh long position as the Markets badly need to correct or at least consolidate to make the pullback healthy and sustainable. We continue to advice to adopt cautious outlook and keep protecting profits at higher levels.