Friday, May 11, 2012

Daily Market Trend Guide -- Friday, May 11, 2012

MARKET TREND FOR TODAY                                                        May 11, 2012
The session remained a disappointing one yesterday as the Markets failed to capitalize on the positive and strong opening it got as it pared all of its gains to finally end the day with negligible loss and consolidate on the Close Charts. The Markets gave a strong opening today and though it traded in the capped range, it did gave its intraday high of 5039.30. Just when it seemed that Markets will stage a pullback, it suddenly and sharply pared all of its gains in a peculiar fashion and pared all of its gains and dipped into the negative as it gave its day’s low of 4950.30. It recovered a bit from there and finally ended the day at 4965.70, posting a nominal loss of 9.10 points or 0.18%. It formed a higher top but slightly lower bottom on the Daily High Low Charts.

 Today expect the Markets to open on a mildly lower note and likely to recover and improve post opening and thus remain volatile and directionless throughout the session and is likely to consolidate at Close levels like yesterday. The opening is likely to take the Markets into OVERSOLD zone and thus turn volatile depending on the intraday trajectory again. Today, the bias would remain towards improvement as we go ahead in the session.

The levels of 5025 and 5080 are immediate resistance on the Charts and the levels of 4940 and 4925 are immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 30.8158 and it is nearly OVERSOLD. Though it has reached its lowest value in l ast 14-days, it does not show any negative divergence. The Daily MACD continues to remain below its signal line. 

The lead indicators are nearly OVERSOLD, NIFTY has huge short positions outstanding and the NIFTY PCR is 0.89 which too is nearly OVERSOLD. Any opening weakness will take the Markets again to its OVERSOLD territory and we may see volatility returning in the Markets.  Further to this, on the Candles, An Engulfing Bearish Pattern has occurred. If  the engulfing bearish pattern occurs during a downtrend (which appears to be the case with NIFTY), it may be a last engulfing bottom which indicates a bullish reversal.  The test to see if this is the case is if the next candle closes above the bottom the current (black) candle's real body.

Overall, the reading for the Markets remain more or less to same what is being written since two sessions. The Markets will remain volatile, but may continue to consolidate at close levels and have a bias towards upside as per technical factors and also as per the F&O statistics which indicate huge built up of short positions. Further to this, the Markets shall also react to the IIP Numbers coming in. We continue to advise the retail investors to remain light, avoid aggressive positions in the Markets while protecting profits on the existing positions. Other positions may safely be held on to. Overall, caution with tinge of optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331

Thursday, May 10, 2012

Daily Market Trend Guide -- Thursday, May 10, 2012

MARKET TREND FOR TODAY                                                 May 10, 2012
The Markets today remained heavily volatile moving in either direction and finally ended with nominal losses as the Rupee remained under constant pressure and Greece political uncertainty continued to cast cloud over the overall sentiments. The markets opened negative on expected lines but soon in the morning trade saw itself recovering and moving into the green to give the day’s high of 5016.25. After moving in a capped range, it suddenly lost ground to pare all of its recovery. With volatility at its maximum, it again saw a very smart recovery in the later part of the session but lost ground again to dip into the red. It finally ended the day at 4974.80, posting a net loss of 25.15 points or 0.50% amidst low volumes. It has formed a lower top and lower bottom on the Daily High Low Charts.

Today, we can expect a modestly positive opening in the Markets and we can see some respite coming in from the artificial pressure that we have been witnessing in last 2-3 sessions. However, with the modestly positive opening expected, it would be critical to see if the Markets are able to capitalize on this and for this, again, intraday trajectory would be important.

The levels of 5020 and 5075 are immediate resistance levels on the Charts and the levels of 4950 and 4930 are immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 31.2942 and it has reached the lowest value in last 14-days which is bearish. However, it does not show any bearish divergence. The Daily MACD continues to remain below its signal line.

NIFTY futures have shed nominal open interest whereas stock futures have continued to add another 1.5 crore shares in Open Interest. The NIFTY PCR stands at 0.97 as against 0.94.

All and all, reading for today’s Markets remain more or less similar to that of yesterday. The Markets may remain dominated with external news flows and remain jittery and volatile. But, given the lead indictors and F&O data, the down side can be limited and also, any weakness will take the Markets nearly Oversold.

Overall, given the above reading, we continue to maintain our advise that the retail investors should refrain from taking aggressive positions and shorts should be strictly protected. Very selective purchases should be made and profits should be very vigilantly protected. Overall, cautious optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331


Wednesday, May 9, 2012

Daily Market Trend Guide -- Wednesday, May 09, 2012

MARKET TREND FOR TODAY                                                        May 9, 2012
Phenomenal shorts were created the last hour and half of trade where in the Markets saw sudden weakness creeping in as it ended the day with significant losses on average volumes. The Markets opened on a negative note as expected but later recovered in the late morning trade to trade almost flat. However, in the second half of the session, the weakness crept in again and it intensified in the last hour of the trade as the Markets went on to give the day’s low of 4983.60. It finally ended the day at 4999.95, posting a loss of 114.20 points or 2.23%. While adding huge short positions, it has formed a Parallel Bar on the Daily High Low Charts.

The Markets have weakened due to external pressure exerted on it and more because of non-technical grounds and the coming off of the Markets after closing a notch above 200-DMA post bounce back is a ample indicator of that. Today also, the Markets are expected to open moderately lower and remain volatile heavily dependent on the intraday trajectory it forms post opening. 

Today, the levels of 5045 and 5120 are immediate resistance on the Charts and the levels of 4970 and 4955 are immediate supports.

The RSI—Relative Strength Index on the Daily Chart is 32.5927 and it has reached its lowest value in last 14-days which is bearish. However, it shows no negative divergence. The Daily MACD continues to trade below its signal line.

It would be important to note that yesterday’s session has added phenomenal Open Interest indicating huge creation of shorts in the system. Nifty May 5000 Put added more than 2.5 lakh shares while Nifty May 4900 Put has seen addition of whopping nearly 11 lakh shares in open interest (OI). Even 4800 put added close to 10 lakh shares in OI. Nifty May 5200 Call added close to 5 lakh shares in Open Interest indicating short term resistance for the current series. NIFTY Futures added massive 9.43% or 17.43 lakh Shares in the Open Interest.

Further to this, on the candles, An Engulfing Bearish Pattern has occurred. If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with NIFTY), it may be a last engulfing bottom which indicates a bullish reversal.  The test to see if this is the case is if the next candle closes above the bottom the current (black) candle's real body.

Due to the factors mentioned above, even if the Markets show initial weakness and further weakness shall take it to nearly Oversold levels and given this huge shorts, may find support anytime. We strongly advise the retail investors to remain light and avoid any kind of aggressive positions and especially avoid shorts. It may happen again that the Markets improve as we go ahead in the session. Overall, cautious outlook is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331



Tuesday, May 8, 2012

Daily Market Trend Guide -- Tuesday, May 08, 2012

MARKET TREND FOR TODAY                                             May 8, 2012
The Markets behaved in line with what was analyzed in the yesterday’s edition of Daily Market Trend Guide as it opened with a gap down, traded with loss in the first half of the session and then witnessed heavy short covering as it recovered over 120-odd points from its day’s low to finally end the day with modest gains. The Markets opened gap down as expected and traded with almost 1.8% of losses until the first half of the session as it gave its intraday low of 4988. However, post FM’s announcement of deferring GAAR for a year it saw a massive short covering in the second half. It went on to give intraday high of 5124.75 and finally ended the day at 5114.15, posting a gain of 27.30 points or 0.54%. However, it has still formed a lower top and lower bottom on the Daily High Low Charts.

Today, after rising almost over 120 points yesterday from its day’s low, the Markets are expected to open flat to mildly negative and consolidate. It has managed to close a notch above its 200-DMA which is  5114 today and thus, as analyzed yesterday it has kept its support of 200-DMA intact as of now.

The levels of 5150 which is the 100-DMA of the Markets and the levels of 5180 which is a pattern resistance would act as resistances and the levels of 5114 and 5075 would is expected to act as support at Close levels.

The RSI—Relative Strength Index on the Daily Chart is 39.5041 and it is neutral as it shows no negative divergence or failure swing. The Daily MACD still continues to trade below its signal line. On the Candles, A big white candle occurred.  This is generally considered bullish, as prices closed significantly higher than they opened.  If the candle appears when prices are "low," it may be the first sign of a bottom.

However, having said this, the Markets still continue to remain in critical condition. It has satisfied the first test of not breaching the important support due to the factors mentioned in our yesterday’s edition of the Daily Market Trend Guide. However, it faces multiple resistances in the next 100-150 points and it will have good up move only above the levels of 5275. Until this happens, we will continue to see jitters in the Markets. 

NIFTY has shed 2% or 388950 shares in Open Interest as the rise was seen due to short covering. It would be very important to see that this short covering is replaced with fresh buying. Stock Futures have continued to show addition in Open Interest which is a positive sign. Also, the NIFTY PCR of 1.01 also point towards positive bias.

All and all, we might see mild negative opening but Markets are expected to consolidate with positive bias. Very selective stock specific action would be seen and it is advised to totally refrain from shorts and keep protecting the profits vigilantly at higher levels. Overall, positive optimism is advised for today.

Milan Vaishnav,
Consulting Technical Analyst,
+91-98250-16331