Gemstone Equity Research & Advisory Services

Friday, January 20, 2012

Daily Market Trend Guide -- Friday, January 20, 2012

MARKET TREND FOR TODAY January 20, 2012

The Markets yesterday opened on a positive note and maintained its gains throughout the day as it extended its up move by ending with decent gains. The Markets opened positive and strong and maintained its gain by spending the session bit volatile in 30—odd point range. It kept moving in this capped range, gave its intraday high of 5023.80 and ended the day at 5018.40, posting a decent rise of 62.60 points or 1.26%. In the process, the Markets have formed a sharply higher top and higher bottom on the Daily High Low Charts.

For today, the technicals point towards continuation of this up move, at least in the initial session. The Markets are expected to open on a positive note and continue with its up move. The Markets shall open positive and the intraday trajectory, like yesterday, along with the volumes would be critically important to determine that the Markets continues with its up move or consolidate or see some profit taking after opening higher.

For today, the levels of 5052 and 5075 are expected to act as resistance and the levels of 4980 and 4930 levels. With the Markets rising, the gap between probable resistances and supports have widened a bit due to continuation of up move.

The technical reading and the F&O statistics present a mixed picture. The RSI—Relative Strength Index on the Daily Chart is 66.7756 and it has reached its highest value in last 14-days which is bullish. It does not show any negative / positive divergence. The Daily MACD is bullish as it continues to trade above its signal line. On the Candles, A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 5 rising windows in the last 50 candles--this makes the current rising window even more bullish.

Having said this, the NIFTY Futures in total have reported shedding of 11 lakh shares in Open Interest. This translates into the reading that the Markets may open higher, spend some time in the gains but are remotely likely that it sees either consolidation from higher levels, or sees some profit taking. This may keep the markets in a range and also bit volatile. It is advised that aggressive longs should be restrained and any existing profits should be vigilantly protected. Stock specific activities may continued to be seen. Overall, neutrally cautious outlook is advised for the day.

Milan Vaishnav,

Consulting Technical Analyst,

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com

Thursday, January 19, 2012

Daily Market Trend Guide -- Thursday, January 19, 2012

MARKET TREND FOR TODAY January 19, 2012

After a smart rally on Tuesday, the Markets took a breather yesterday as it spent the session on a consolidation note, taking supports precisely at the mentioned levels and ending the day on mildly lower note. The Markets opened positive, and gave its intraday high of 4980.65 in the morning trade. After trading briefly with capped gains, the Markets saw some correction coming in as it slipped into the red. It went on to give the low of 4931.05, taking support at its 100-DMA and recovered from those levels to end the day at 4955.80, posting a modest loss of 11.50 points or 0.23% and formed a slightly higher top and bottom on the Daily High Low Charts.

For today, we can expect the Markets to open on a positive and stronger note and continue with its up move that took some breather yesterday. The Markets are expected to open positive and continue with its up move at least in the initial trade. Today, the intraday trajectory that it forms, especially in the morning trade would be critically important to decide the trend for the rest of the day.

The levels of 4990 and 5055 are expected to act as resistance the levels of 4930 and 4890 are expected to continue to act as immediate supports.

All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 63.1725 and is neutral as it shows no negative divergence or failure swings. The Daily MACD remains bullish as it continues to trade above its signal line.

The above technical reading is supported by F&O statistics which shows addition of open interest in NIFTY Futures and the Open Interest across Stock futures remains unchanged. Given this, the Markets are technically better poised to continue with its up move.

All and all, buoyancy in today’s session can be expected. However, in event of Markets moving past the 5000-5030 levels , it would be prudent to avoid aggressive buying and protect existing profits at higher levels. In event of higher opening, it is advised to remain highly selective in making purchases and very vigilantly protect profits as just mentioned above, while strictly avoiding any major shorts. Overall, positive outlook is advised for today.