Gemstone Equity Research & Advisory Services

Friday, July 1, 2016

Daily Market Trend Guide -- Friday, July 01, 2016

MARKET TREND FOR FRIDAY, JULY 01, 2016

The Markets continued to recover and had a healthy expiry session yesterday as it ended yet another day with gains. Today, we are likely to see the Markets taking a breather from the gaining streak. We can fairly expect the Markets to open on a flat note and look for directions. The levels of 8300 would be key levels to watch out for and it would be interesting to see if the Markets attempt a break out and if they do, it would be further interesting to see if the higher levels are sustained.

For today, the levels of 8300 and 8345 will act as immediate resistance levels or the Markets. The supports come in much lower at 8240 and 8175 levels.

The RSI—Relative Strength Index on the Daily Chart is 61.0283 and it does not show any failure swing. However, the NIFTY has formed a fresh 14-period high whereas the RSI has not and this is Bearish Divergence. The Daily MACD stays bearish as it continues to trade below its signal line.

While having a look at pattern analysis, we had mentioned on the day Brexit voted to exit Europe that the Markets will show a sharp knee jerk reaction to this but eventually techincals would take over and we will see the Markets recovering gradually. Over last 5 days, this is what precisely has happened. The Markets anyway had pattern resistance before this even at 8294-8300 levels and today the Markets are again back to these levels. So, individually speaking, with all the Brexit volatility recovered and dealt with, the Markets faces a resistance around 8295-8310 levels. It would be interesting to see the behavior of the Markets vis-à-vis this level and some amount of consolidation at higher levels cannot be ruled out.

All and all, it would be healthy if the Markets see some amount of consolidation at higher levels as the Markets have seen rise of nearly 375-odd points from the Friday’s intraday lows. Any consolidation if we see, would be very healthy for the Markets in the long term. The lead indicators suggest some weariness in the Markets at higher levels and it would be prudent if we use all up moves from here on to book and protect profits in existing positions. Fresh position should be kept limited and stock specific. Overall, cautious outlook is advised for the day.

Milan Vaishnav, CMT

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

Thursday, June 30, 2016

Daily Market Trend Guide -- Thursday, June 30, 2016

MARKET TREND FOR THURSDAY, JUNE 30, 2016

The Markets have staged a smart up move on back of positive global cues and have managed to trade back into the channel moving past its pattern resistance and in the process, has recovered nearly 75% of its Friday’s losses. Today as well, tracking positive global cues and favorable technicals, the Markets are likely to see a decently positive start and move towards its immediate top. It would be extremely important to see if the Markets sustain the expected positive opening and capitalize on that.

For today, the levels of 8255 and 8290 will act as immediate resistance levels for the Markets. The supports come lower at 8150 and 8110 levels.

The RSI—Relative Strength Index on the Daily Chart is 56.2962 and it remains neutral as it shows no bullish or bearish divergence or any failure swing. The Daily MACD stays bearish as it continues to trade below its signal line.

On the derivative front, the NIFTY June series have shed over 25.58 lakh shares or 23.79% in Open Interest whereas July series added over 32.05 lakh shares or 38.68% in Open Interest. The NIFTY PCR stands at 1.15 as against 1.07.

While having a look at pattern analysis, we now need to take a individual look our Charts. The Brexit effect is left behind and the Markets have recovered over 70% of its losses.

Having said this, until yesterday, the Markets were resisting to the trend line as it had fallen out of the rising channel drawn from February lows. Yesterday, the Markets have managed to get inside that channel once again. With today’s expected opening, the Markets will move towards testing its immediate highs of 8280-8295 range which was formed pre-Brexit date. This range, individually speaking, continues to remain an immediate top and resistance for the Markets. It would not be a surprise if we see some mild profit taking bouts at higher levels.

Also, given the expiry of the current series today, we will see the Markets remaining dominated with rollover centric activities. Even if the undercurrent continues to remain intact, some minor profit taking bouts at higher levels cannot be ruled out. However, it would once again be a healthy consolidation if it happens at higher levels, before the Markets attempts to move past its immediate top. Overall, cautious optimism is advised for the day.