Saturday, December 17, 2016

Weekly Technical View - NIFTY - December 19 thru December 23, 2016

WEEKLY MARKET OUTLOOK FOR DECEMBER 19 THRU DECEMBER 23, 2016
Following a Bullish Hammer formed on the Weekly Charts three weeks back, the NIFTY has formed a temporary bottom, pulled back and in this week consolidated as expected in our previous note. In the Week gone by, the NIFTY has ended with net loss of 122.30 points or 1.48% but has formed a lower top but higher bottom on the Weekly Bar Charts.  In the coming Week, we expect the NIFTY to continue to consolidate with a positive bias and the levels of 200-DMA on the Daily Charts and the levels of 8275 on the Weekly Charts will be important to watch out for. It would be important for the Markets to move past these levels in order to sustainably resume its up move.

In the coming week, the levels of 8190 and 8175 will remain important resistance levels to watch out for. The supports will come in at 8060 and 8000 levels.

The RSI—Relative Strength Index on the Weekly Chart is 43.1269 and it remains neutral and it shows no bullish or bearish divergence or any failure swings. The Weekly MACD is bearish as it continues to trade below its signal line. However, has started to narrowly correct the gap. On the Candles, Harami pattern has occurred. This is formed when the current Candle is engulfed by the previous candle and they are of opposite color. However, given the size of the Candle, they are not classical Harami but still holds potential to halt the downsides. This increases the chance that the NIFTY will halt its downside this week, consolidate and attempt to move up. As always, this will need confirmation in the following week.

On the derivative front, we have seen sustained reduction in Open Interest while the NIFTY declined. This signifies reduction / unwinding of positions. It would be important to see if this gets replaced with the fresh longs.

While having a look at pattern analysis, the NIFTY has seen retracement while coming off from a Double Top formation from 8968 levels. This Double Top formation has occurred over a 6-month period and poses formidable resistance. The NIFTY declined from 8968 to 7928 levels and has attempted to form a base by showing some signs of reversal. A temporary bottom has been formed at 7928 and the NIFTY has been attempting to form a base and reverse its direction. As of now, the fall has been arrested and it would be important to see if the NIFTY moves past critical levels to resume its uptrend.

Overall, the NIFTY will have to see itself moving past and trading above 8275 levels to resume its uptrend. In event of NIFTY not moving past these levels, it is expected that it will continue to consolidate in a broad range. The US and European Markets have been trading “overbought” but are continuing to display great amount of strength. Even if they correct or consolidate in coming week, some divergence in performance between NIFTY and these Markets cannot be ruled out. We continue to reiterate to avoid shorts until there is any significant structural breach and utilize all downsides to make moderate but select purchases.

A study of Relative Rotation Graphs – RRG suggest that just like previous two weeks, we will continue to see sustained out-performance  and improvement in CNX IT Stocks. Though leadership within the IT Index is likely to change, we will see them improving their performance. Apart from this, we will also see improved performance in some select PHARMA and INFRA stocks. CNXMETAL and ENERGY stocks are likely to lead if NIFTY gains in coming week. Some select MID50 Stocks and AUTO stocks will consolidate while FMCT is likely to continue to lag the Markets. Some good performance from PSUBANKS can also be expected in coming week.

Important Note: RRG™ charts show you the relative strength and momentum for a group of stocks. In the above Chart, they show relative performance as against NIFTY Index and should not be used directly as buy or sell signals.

(Milan Vaishnav, CMT, is Consultant Technical Analyst at Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com

+91-98250-16331 



Friday, December 16, 2016

Daily Market Trend Guide -- Friday, December 16, 2016

MARKET TREND FOR FRIDAY, DECEMBER 16, 2016
Indian Equities had a remarkably volatile session but the overall trade remained more or less on similar lines. The NIFTY opened lower but soon saw over a 100-odd point’s pullback from the pattern supports mentioned in our yesterday’s edition. The last hour of the trade saw some weakness and the NIFTY finally ended the day with a modest loss. Today’s session is likely to remain critical for the NIFTY. The zones of 8140-8160 will remain critical to watch out for. The rising yields in the US and other markets is likely to prevent the NIFTY from a runaway rise and we can expect some more consolidation in the Markets, though with a positive bias.

For today, the levels of 8172 and 8230 levels will act as immediate resistance and the supports are expected to come in at 8120 and 8065 levels.

The RSI—Relative Strength Index on the Daily Chart is 45.3387 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD remains bullish as it continues to trade above its signal line. On Candles, a long lower shadow has occurred. Since it has occurred during a pullback, it can act moderately bearish and if the NIFTY forms a lower low today, it can bring in some temporary weakness in immediate short term.

On derivative front, the NIFTY December futures have shed over 9.96 lakh shares or 6.01% in Open Interest. This continues to make it evident that NIFTY continued to witness some unwinding of long positions.

Coming to pattern analysis, it is now evident that post formation of 7928 lows, the NIFTY has attempted to form a temporary base near those levels. While pulling back, it has so far managed to form higher bottoms and has been tracking a small rising channel trend line drawn from the recent lows. The current Close has seen itself ending a notch below that level. The zones of 8140-8160 will be important levels to watch out for as any dip below 8140 will see NIFTY attracting some temporary weakness. Also, NIFTY currently trades below its 200-DMA 8216 and it would be critically important for the NIFTY to move past and trade above these levels.

All and all, NIFTY once again remains in consolidation and no-trade zones. The analysis for today remains on similar lines as shorts should be avoided as the Markets have not shown any significant breach on the Daily Charts. However, since it trades below 200-DMA, fresh purchases may be made beyond 200-DMA and until this happens, exposures in the Markets should be curtailed and kept to very select stocks. We reiterate to avoid major shorts and maintain cautious outlook in the Markets. We will see CNXIT and select MidCaps attempting to outperform.

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com


+91-98250-16331 

Thursday, December 15, 2016

Daily Market Trend Guide -- Thursday, December 15, 2016

MARKET TREND FOR THURSDAY, DECEMBER 15, 2016
The Indian Equity Markets had a volatile session especially the second half wherein the NIFTY oscillated in a capped range and ended the day with a modest cut. Today, while we open, we will see the NIFTY reaction to the FOMC Interest Rate decision. It becomes important to note that a 25bps rate hike has been factored in by the Markets. As evident from the Daily Charts, the NIFTY has been successfully tracking the rising trend line drawn from the recent lows of 7916 and given the rising nature of this trend line, the zones of 8140-8160 will remain critical to watch out for. Any opening below these levels will cause the NIFTY to resist in this zone. It is also important to note that the US and the European Markets are trading quite “overbought” given the fact that the rate hike stands factored in. Even if these Markets correct a bit, we may see divergence of performance on our bourses as the domestic equity markets have remained gross under-performer in the recent past as compared to global peers.

For today, the levels of 8212 and 8275 will act as immediate resistance levels while the supports are expected to come in at 8140 and 8065 levels.

The RSI—Relative Strength Index on the Daily Chart is 46.9832 and it continues to remain neutral and it does not show any bullish or bearish divergence or any failure swings. The Daily MACD is bullish and it continues to trade above its signal line. An Engulfing Bearish Pattern has occurred on the Candles. This signifies a potentially bearish day ahead but this requires confirmation on the next trading day.

On the derivative front, the NIFTY December futures have shed over 3.79 lakh shares or 2.24% in Open Interest. We can fairly observe that some positions have been pared while going ahead for the session ahead of FOMC decision.

While having a look at pattern analysis, we can fairly observe, as evident from the Daily Charts that the NIFTY has been tracking the rising trend line drawn from 7916 lows that it formed recently. It is important to note that the NIFTY has not successfully managed to stay above 200-DMA and secondly, the pullback has not been strong and convincing enough. However, as of today, the NIFTY has not breached the rising trend line drawn from recent lows and therefore, the zones of 8140-8160 remain critical levels to watch out for.

Overall, it is once again evident that any opening or drop below the 8140-8160 levels wills some temporary weakness creeping into the Markets. In the same breath, given the gross under-performance of the Indian Markets vis-à-vis its global peers and the existence of shorts in the system might lend support at lower levels. We recommend not to take any major directional positions so long as NIFTY trades below 200-DMA. Post 200-DMA, select purchases may be continued as IT and other select stocks are likely to predominantly out-perform in coming days.

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com


+91-98250-16331 

Wednesday, December 14, 2016

Daily Market Trend Guide -- Wednesday, December 14, 2016

MARKET TREND FOR WEDNESDAY, DECEMBER 14, 2016
Markets had a good session yesterday as it tracked the pattern support on the Daily Charts and ended the day on a positive note. The NIFTY saw a stable opening but it was the second half that saw the Markets moving past its 200-DMA once again and ending the day a notch above it. Today, we expect flat to mildly positive start to the Markets and we expect the NIFTY to continue with its up move at least in the initial trade. Global cues have not sprung any negative surprise and with the yields remaining stable, we expect positive stability in the Markets. Markets will keenly watch FOMC meet over next two days to come wherein it has more or less discounted 25bps rate hike by the Federal Reserve.

For today, the levels of 8275 and 8330 will act as immediate resistance levels for the Markets. The supports come in at 8205 and 8120 levels.

The RSI—Relative Strength Index on the Daily Chart is 49.2456 and it remains neutral as it shows no failure swings or any bullish or bearish divergence. The Daily MACD remains comfortably bullish as it continues to trade above its signal line. No significant formation on Candles is seen.

On derivative front, the NIFTY December futures have added over 4.57 lakh shares or 2.77% in Open Interest.

Coming to pattern analysis, after forming recent lows of 7916, the NIFTY has attempted to form higher lows and is currently in the process of confirming a reversal. Though it has comfortably marked these levels as its immediate short term bottoms, it has been forming a small rising channel while pulling back as evident from the Charts. The levels of 8120-8150 will now act as important pattern support in coming days while the NIFTY consolidates and continues with its up move. It would be very much desirable if the NIFTY is able to maintain itself above 200-DMA which stands at 8207. However, in event of any downside risks while the NIFTY reacts to FOMC decision in coming days, the zones of 8120-8150 will remain important pattern supports to watch out for.

Overall, the NIFTY is likely to continue to trade with positive bias and we continue to reiterate our advice to continue to make modest purchases with every consolidation or intermittent bouts. Today and in coming days, we will continue to see sectoral outperformance and IT Stocks, Energy, etc will continue to see select purchases. Overall, so long as NIFTY maintains the levels above 8120-8150 range, positive outlook should be maintained on the Markets. Tapering of Bond yields and some tapering off will extend help to this reading.

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com


+91-98250-16331 

Tuesday, December 13, 2016

Daily Market Trend Guide -- Tuesday, December 13, 2016

MARKET TREND FOR TUESDAY, DECEMBER 13, 2016
The session on Monday remained much weaker than what was expected as it ended the day with a cut of 90.95 points or 1.10% with clear out-performance coming in from IT stocks. Today, we  expect a stable start to the Markets but since NIFTY has once again closed a notch-below its 200-DMA which stands at 8202 today, we would advice participants to refrain from taking any major directional exposure. However, even with the decline, the NIFTY continue to rest at a pattern support. The levels of 8202 and 8120 will remain critical levels to watch out for.

For today, the levels of 8200 and 8285 will remain immediate resistance levels for the Markets. The supports come in at 8120 and 7980 levels.

The RSI—Relative Strength Index on the Daily Chart is 46.1234 and it remains neutral showing no failure swings or any bullish or bearish divergences .The Daily MACD continue to remain bearish as it trades above its signal line. On Candles, a falling window (a gap) occurred. This usually has bearish implications going ahead unless the NIFTY formed a bar with a higher bottom in the following session.

On the derivative front, the NIFTY December has shed over 6.48 lakh shares or 3.78% in Open Interest. This shows some unwinding / reduction in the positions in the Markets.

Coming to pattern analysis, the NIFTY confirmed its bottom at 7928 levels for the immediate short term. It has been attempting to reverse the trend but reversal is not yet confirmed in the convincing manner. The NIFTY has been forming a mildly rising channel from these levels but in the process, has not managed to move past 200-DMA in a convincing manner. At present, it has closed a notch below the 200-DMA which stands at 8202 today. It would be of paramount importance for the NIFTY to move past its 200-DMA to continue with its attempt to confirm the reversal.

All and all, the NIFTY has come into a no-trade levels once again as it rules below 200-DMA. We reiterate our view not to create any major short positions as the inherent trend in the NIFTY remains intact and we expect the NIFTY to attempt and continue with its pullback once again. Once the NIFTY scales above 200-DMA once again, one can start making select purchases once gain. So long as NIFTY trades below the 200-DMA, any major directional exposures should be avoided. With bond yields across Europe and US taking some breather, some stability returning to the Markets can be expected.

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com


+91-98250-16331 

Monday, December 12, 2016

Daily Market Trend Guide -- Monday, December 12, 2016

MARKET TREND FOR MONDAY, DECEMBER 12, 2016
The Friday’s session saw the NIFTY consolidating very much on expected lines as the Markets traded in a very capped and narrow range and ended the day with minor gains. Today, we may once again see a stable start to the session but possibility of the NIFTY continuing to consolidate cannot be ruled out. Today’s opening and the trajectory that the NIFTY forms after opening will be crucial to decide the trend for the day. In event of any consolidation, the 200-DMA of NIFTY will act as support at lower levels. On the upper side, we can fairly expect the Markets to continue with its up move to its logical targets set forth.

For today, the levels of 8290 and 8335 will act as immediate resistance levels for the Markets. The supports come in at 8220 and 8175 levels.

The RSI—Relative Strength Index on the Daily Chart is 51.3548 and it has reached its highest value in last 14-days which is Bullish. It does not show any bullish or bearish divergence. The Daily MACD is very much bullish as it trades above its signal line. On Candles, a Spinning Top occurred.  This is little significance as it often denotes a session with is very narrow in range and often direction-less and indecisive.

On derivative front, the NIFTY December futures have added yet another 2.85 lakh shares or 1.70% in Open Interest. This indication continuation of bullish inclinations in the Markets.

Coming to pattern analysis, the NIFTY has moved past its 200-DMA levels and have close above that. In the previous session as well, it has managed to stay comfortably above 200-DMA. It has done so after forming a higher bottom after a retracement from a pullback which it began after forming recent lows of 7928 levels. As of now, the NIFTY has confirmed this bottom for the immediate short term. Even if the NIFTY consolidates, the 200-DMA will remain its immediate support at Close levels.

The 200-DMA of the NIFTY stays at 8196 today and even if the Markets consolidate this level will be the crucial levels to watch out for. The overall structure of the technical charts, the lead indicators supported by the F&O data, we can fairly conclude that the Markets continue to display inherently bullish bias. Any short term consolidation will have limited downsides. We continue to reiterate to avoid major short positions and maintain cautious optimism in the Markets.

Milan Vaishnav, CMT
Technical Analyst
(Research Analyst, SEBI Reg. No. INH000003341)
Member
Market Technicians Association, (MTA), USA
Canadian Society of Technical Analysts, (CSTA), CANADA
Association of Technical Market Analysts, (ATMA), INDIA

http://milan-vaishnav.blogspot.com


+91-98250-16331