Thursday, May 7, 2015

Daily Market Trend Guide -- Thursday, May 07, 2015

MARKET REPORT                                                                          May 07, 2015
Yesterday remained a terribly disappointing session for the Markets as it opened lower, saw a very sharp downside and continued to remain weak throughout the session and ended the day with a deep cut. Some amount of weakness in the Markets was not ruled out but what we saw yesterday was much more that what was expected. Post witnessing a negative opening, the Markets suddenly saw a very deep 125-odd point cut in just ten minutes of the trade. Thereafter, it continued to post gradual lows and formed its intraday low of 8083 in the final minutes of the trade. No recovery of any nature was seen and the finally the Markets ended the day at 8097, posting a sharp fall of 227.80 points or 2.74% while forming a sharply lower top and lower bottom on the Daily Bar Charts. Yesterday’s fall was largely attributed to Algo Trades by few  big FIIs wherein very large trades get executed at Market Prices and in the process absorbing every subsequent lower bids.
MARKET TREND FOR THURSDAY, MAY 07, 2015
Today, Markets continue to remain on a critical juncture wherein, if we look purely from the technical angle, it shows a high probability of a rebound. However, today, it is expected to open on a quiet note and look for directions. Given the near over-sold nature of the Markets some technical possibilities of a technical rebound remain. However, the Markets are more guided by few big shot selling everyday and during such times, technicals tend to remain by the sidelines. Artificial executions / systemic trades, such as Algo Trades tend to disregard the technicals.
For today, the levels of 8145 and 8210 are likely resistance levels for the Markets. The supports come in at 8050 and 8010 levels.
The RSI—Relative Strength Index on the Daily Chart is 33.0481 and it does not show any failure swing. However, the NIFTY has reached its lowest point in last 14-days whereas RSI has not done so. This is Bullish Divergence. The Daily MACD continues to remain bearish trading below its signal line.
On the derivative front, NIFTY May futures have continued to shed over 3.38 lakh shares or 2.02% in Open Interest.
Coming to pattern analysis, the Markets have once again completely disregarded the presence of something as important as 200-DMA while on its way down. This typically happens when one or two specific factors cause downsides and they very often typically continue to show disregard to even major technical indicators. However, if we anyways attempt to take cues from technicals, the Markets may once again attempt a rebound even if it sees some minor downsides post opening.
Overall, in such circumstances, it would be unwise to take cue only from the technical indicators. When Algo Trades are out to get executed they tend to disregard the technical levels. Given this thing, even if the Markets attempts to rebound, it is advised to continue to refrain from taking any aggressive positions until the directional bias is established. Fresh purchases may be made in good stocks at lower levels as the present conditions provide excellent entry points but this should be kept limited. Continuance of caution is advised for the day.

Milan Vaishnav,
Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member:
Association of Technical Market Analysts, INDIA

www.MyMoneyPlant.co.in
+91-98250-16331

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