Friday, September 23, 2011

Special Editions - Daily Market Trend Guide -- Friday, September 23, 2011 (Published in the morning before the Markets opened)

Special Edition – Market Trend For Today
 
The Federal Reserve’s negative tone and statement on US Economy triggered a global sell-off across the Markets and Indian Markets too were not spared as it ended the day with steep fall of 209.60 points NIFTY while adding huge amount of short positions and open interest. The Markets opened on a gap down note following global weakness despite supportive technicals. It made a feeble attempt to recover but in the second half of the session, fresh selling pressure gripped the Markets as it went on to give the day’s low of 4907.05. It showed no signs of recovery of whatsoever nature and finally ended the day at 4923.65, posting a deep cut of 209.60 points or 4.08%.

On the Derivative front, NIFTY September futures added massive 2251950 shares or 10.34% in Open Interest and traded at 6-point discount signifying creation of short positions in the Markets.
 
The “So-called” Operation Twist of the Federal Reserve did more bad than good when it announced plans to try to push long-term interest rates down by purchasing $400 billion in long-term Treasury securities with proceeds from the sale of short-term government debt, saying the economy clearly needed help. By reducing the supply of long-term Treasuries, the Fed intends to force investors to accept lower rates of return on the ultra-safe securities, or to move their money into a wide range of riskier investments that could do more to promote growth. The Fed Reserve also said that it would resume direct efforts to help the mortgage market by reinvesting the proceeds of its existing investments in mortgage-backed securities into new mortgage-backed securities, rather than putting the money in Treasuries.

At MyMoneyPlant.co.in, it has been our tradition to come out with “Special Edition” of Daily Market Trend Guide. As have always  done successfully in the past, we have always endeavored to present correct analysis and picture of the happenings in such trying and difficult times.
 
History suggests that Indian Markets too have been effected by what is called “External Factors” but the effect that it sustained always remained temporary and in fact always created opportunities for smart investors to pick up stocks at much lower levels.
 
COMING TO TODAY’S MARKET, similar story is taking shape again at the domestic front. Today, we can expect the Markets to open on a moderately negative note and look for directions, but technicals suggest that it is likely to pose some resilience against global weakness and may not remain weaker apart from a day or two, presenting a great opportunity to make selective investments.
 
It is important to note that even with the single largest decline since 2009, the Markets have not shown any structural breach on the Daily Charts. With negative opening expected today, the levels of 4880 and 4855 are expected to act as supports. It is very important to note at this juncture that the Markets lead indicators have shows very clear signs of the Markets offering resilience to the global weakness as detailed as under:
 
First of all, the Markets have added huge Open Interest as high as 20-22% across Stock Futures and over 11% in NIFTY Futures signifying huge creation of Open Interest. Further to this, the RSI – Relative Strength Index on the Daily Charts is 41.6814 and it does not show any failure swing. In fact, while the NIFTY has set a new 14-day low, the RSI has not and this is BULLISH DIVERGENCE.
 
Also important to note that the Daily MACD has continued to trade above its signal line in spite of sharp fall and is currently bullish.
 
It is important to understand the fact that with the Western Markets remaining in current situations, the Emerging Markets are likely to see inflows again and India too is stand to gain, especially at current valuations, and with other indicators remaining in place.
 
Having said this, it is strongly advised at as always, after 2-3 days of weakness, the Indian Markets decouples itself as everything remains intact at the domestic front and even food inflation has reported a sharp dip yesterday which has gone unnoticed. Thus, like as always happened in the past, we are very much likely to see stability returning to the Markets, if not today, then  in a day or two.
 
All and all, it is strongly advised to not to panic in current situation but use the current line of events to pick up stock specific opportunities in a highly selective manner. It is also advised to avoid short positions as there are huge number of short reported in the system which can trigger short covering, again if not today than in a day or two. Cautious optimism is advised for today.

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

Thursday, September 22, 2011

Daily Market Trend Guide -- Thursday, September 22, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets had a quiet session yesterday as after opening flat and after trading with modest gains, the Markets chose to consolidate and it ended the day with negligible losses and in the process have still formed a higher top and higher bottom on the Daily High Low Charts. The Markets yesterday gave intraday high of 5168.40 and thus, again resisted to the levels of 5170 and thus this levels have become an immediate top for the Markets.

For today, expected the Markets to see a gap down opening on back of global weakness arising out of the world not taking the FED Announcements made overnight in the US. This has resulted into US Markets ended lower and the reaction being extended in the Asian Markets as well. Following this, the Indian Markets too is expected to open on a gap down note. With this, the levels of 5050 and 5010 are expected to act as supports.

The RSI—Relative Strength Index on the Daily Chart is 53.2905 and is neutral as it shows no negative divergence or failure swing. The Daily MACD continues to remain bullish as it trades above its signal line.

Having said this, it is important to note the following. The Markets, as of today, are still in the Ascending Triangle with the levels of 5170 acting as multiple top resistance. The Markets have formed higher bottoms as of now. Also important to note that any opening and trading near 5050-5035 levels will still keep the Markets still within critical support levels. Statistical inputs also show this range as a strong support. Also, it is important to note that any turmoil in the Global Markets will ultimately divert monies to Emerging Markets and thus, India, which has underperformed its peers is likely to show some resilience. Thus, keeping all this in view, we may see a gap down opening, but the opening can be near the support levels and there are chances that Markets may not break further or go down very little post opening and may attempt to improve as the session progresses. Keeping all this in mind, it is strongly and best advised that attempt of bottom hunting and also shorts should be avoided and liquidity should be maintained to protect positions. Cautious outlook is advised for today.

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

Wednesday, September 21, 2011

Daily Market Trend Guide -- Wednesday, September 21, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets had a wonderful session yesterday wherein it witnessed all round buying on back of favorable technicals and positive global cues and ended the day with robust gains. The Markets have, in the process, formed a sharply higher top and higher bottom on the Daily High Low Charts.

Today, expect the Markets to open on a flat to mildly negative note and consolidate in the early trade. Today, the Markets are critically poised and its behavior today shall determine its trend for today as well as for coming sessions.

Today, with the Markets expected to open on a flat to mildly negative note, the levels of 5170 and 5231 in the form of 50-DMA shall continue to act as resistance and the levels of 5105 and 5070 are expected to act as supports. The consolidation of the Markets in the initial trade cannot be ruled out.

All lead indicators point towards continuation of up move after brief consolidation. RSI—Relative Strength Index on Daily Chart is 53.7515 and it has reached its highest value in last 14-days, which is BULLISH. Also, the RSI has set a new 14-day high whereas NIFTY is yet to do so. This is BULLISH DIVERGENCE.

The Daily MACD continues to trade above its signal line and is therefore bullish.

The Markets, even after yesterday’s up move are still ruling below 517 levels and is still within the Ascending Triangle Formation and are yet to break out from it. A sustainable break out shall occur only after the Markets moves past this levels and trades above that.. Since the Markets are yet to move past this levels, there are chances that it opens mildly negative and consolidates in the initial trade and thus, the intraday trajectory that it forms shall continue to remain critically important.

All and all, apart from possible minor consolidation which may keep the Markets bit volatile, the overall trend still has positive bias left. Thus, it is advised to remain stock specific avoiding shorts. Overall, positive outlook is advised for today.

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

Tuesday, September 20, 2011

Daily Market Trend Guide -- Tuesday, September 20, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY


The Markets remained yesterday for the entire session in a negative territory trading in a very narrow intraday range and in the process ended the day with modest losses and also formed a lower top and lower bottom on the Daily High Low Charts.

For today, expect the Markets to take some breather from the yesterday’s weakness and also expect some stability to return in the Markets. The Markets are expected to open on a flat note looking for directions and are likely to depend again on intraday trajectory that it forms and also the volumes.

The Markets are expected to open flat and the global cues remaining quiet to positive, are likely to extend stability. The US markets have recovered much from their day’s low. For today, the levels of 5075 and 5110 are likely to act as resistance and 5005 and 4970 are likely to act as supports.

The RSI—Relative Strength Index on the Daily Charts is 47.1383 and it continues to remain neutral without showing any negative divergence or failure swings. The Daily MACD continues to trade above its signal line and is bullish.

Having said this, the Markets have resisted to the levels of 5170 thrice and as mentioned in our previous editions of Daily Market Trend Guide, this has now become an immediate resistance.

Going by the pattern analysis, the Markets have formed a formation known as "Ascending Triangle". This formation has been formed while joining the tops at 5170 and the rising bottoms of 4720 and 4911. The markets are expected not to significantly form a lower bottom from now on as they are trading near immediate short term support if we join these bottoms.

All and all, uncertainty may persist is the Markets for couple of days, but subject to the Markets maintaining certain levels as mentioned herein, the overall trend still remains intact. Stock specific activity will continue and it will be important to keep protecting profits at higher levels. Cautious, but positive outlook is advised for today
Milan Vaishnav,
Consulting Technical Analyst,
www.MyMoneyPlant.co.in  
+91-9825016331
milanvaishnav@mymoneyplant.co.in
milanvaishnav@yahoo.com

Monday, September 19, 2011

Daily Market Trend Guide -- Monday, September 19, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets saw a volatile session, trading in a 60-point range, going in both  the directions violently reacting to the RBI Rate announcements and finally ended the day with nominal gains and in the process have continued to form a higher top and higher bottom on the Daily High Low Charts.

For today, expect the Markets to open on a lower / negative note and look for directions. The levels of 5170 have continued to act as an immediate resistance and this continue to act so in near term.

For today, with the Markets expected to open on a negative note, the intraday trajectory that it forms post opening would be critically important to decide the trend for today, as well as coming week.

Today, with negative opening expected, the levels of 5100 and 5140 and 5170 shall act as resistance and the levels of 5050 and 5010 shall act as supports.

All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 50.3695 and it 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.

On the Weekly charts, the RSI is neutral at 41.0305 without showing any negative divergence or failure swing. The Weekly MACD remains bearish as it trades below its signal line.

Given this reading, the Markets are expected to remain volatile in a capped range. Further to this, the level of 5177 is also a similar pattern resistance on Weekly Charts, like the levels of 5170 on the Daily Charts. Having said this, the markets are likely to have a  confirmed reversal only after it moves past the levels of 5170, though it has made a higher bottom post forming a low.

All and all, stock specific actions will continued to be witnessed. Traders are advised to remain highly selective and keep protecting profits on either side though the trend remains intact. Resilience may be seen from the Markets today. Positive caution is advised.

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

Sunday, September 18, 2011

Daily Market Trend Guide -- Friday, September 16, 2011 (Published in the morning before the Markets opened)

MARKET TREND FOR TODAY

The Markets yesterday consolidated in a capped range for half of the session, but again saw a pullback in the second half as it managed to end the day with decent gains forming a higher top and higher bottom on the Daily High Low Charts.

For today, we may see the Markets opening on a positive note and continue with its up move at least in the initial trade.

The RBI shall announce Rates today and 25 bps of the rate is discounted for by the Markets and anything above this shall seriously harm the sentiments in the immediate term.

The Markets shall open on a positive note and shall trade in a range until Rates are announced and then react to it. Then once the Rates are announced, it shall react to it.

For today, the levels of 5105 and 5170 shall act as resistance and the levels of 5030 and 4990 are immediate supports.

All lead indicators continue to remain in place. The RSI—Relative Strength Index on the Daily Chart is 49.8477 and it is neutral as it shows no negative divergence or failure swings.

The Daily MACD continues to remain bullish as it trades above its signal line.

All lead indicators continue to point towards continuing pullback. The FIIs and DIIs have also continued to remain net buyers. However, NIFTY Futures have been showing net decline in Open Interest since previous two sessions. This implies that the up moves that we have seen has been more due to short covering rather than fresh buying. It is critically important that this gets replaced with fresh buying. The levels of 5170 shall continue to act as major pattern resistance and it would be critically important that to confirm a trend reversal, the Markets will have to move past this levels. Until this happens, we will continue to see the Markets trading in a broad volatile range. All and all, it is advised to continue with the stock specific  approach and also protect profits at higher levels while avoiding shorts. Cautious outlook is advised for today.

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