Daily Technical Market Report for October 30, 2009 - Afternoon Newspaper :

[genius trader]

The Afternoon

NSE India : S&P CNX Nifty - Daily Market Report for: Friday (October 30, 2009)

Downtrend Continues…

By Dominic Rebello

Review of the Previous day: The Nifty fell substantially on Thursday (October 29, 2009) a net 75.60 points (1.57%) and closed at the 4750 point level. The market opened down, then recovered partially, post the opening of the European market, but witnessed a sharp decline in the last half an hour of trade and closed near the day low. Sentiment was extremely bearish and amongst the 50 Nifty stocks, 39 were losers, while just 11 were gainers. Heavy selling was witnessed in infrastructure, metal, telecommunication and select technology stocks.
 
Technical Analysis:
 
Volume: (Qty shares) increased 11.19%. This change is moderate and indicates a moderate participation by investors.
 
Market Breadth: Overall Market Breadth on the NSE was negative. Amongst all the traded stocks, 318 were gainers, 961 were losers and 22 remained unchanged.
 
Slow Stochastic Indicator: The Slow Stochastic Oscillator is in the over-sold zone. The Slow K line in the Stochastic Oscillator is below the slow D line (negative if it continues).
 
 RSI Indicator: The RSI is above the 30 level but is now declining (negative if it continues).
 
MACD Indicator: The MACD fell below zero and is now declining (negative). It is below its 9-day Average (negative).
 
 ADX Indicator & DI Lines: The +DI line is below the –DI line and both lines are diverging (negative if it continues). The ADX is rising while the Market Index is falling, which indicates that the present down trend is increasing in strength.
 
Moving Averages (Trend Indicators)
 
The index:

Is below its 5-day average (at 4878) Negative.

Is below its 15-day average (at 5004) Negative.

Is below its 25-day average (at 5007) Negative.

Is above its 200-day average (at 3928) Positive.
 
Overall Market Strength/Weakness: The indicators and oscillators discussed here are indicating a weak market with a negative bias.
 
Support Levels: For short-term traders the immediate main support is at 4672 marked as S1 (blue line below the Index). The next support is at 4394 marked as S2 (blue line below the Index).
 
Resistance Levels: The immediate main resistance is at 5193 marked as R1 (red line above the Index). The next resistance is at 5580 marked as R2 (red line above the Index).
 
Pivot Point Analysis: For intra-day traders the support and resistance levels are calculated according to the pivot point theory and are:

Pivot point = 4772 (This is the level where the trend is likely to change during intra-day).

Support (1) = 4717.

Support (2) = 4684.

Resistance (1) = 4805.

Resistance (2) = 4859.
 
(For Support& Resistance levels of all F&O stocks refer to today's Afternoon newspaper)
 
Outlook for Today: On Japanese candlestick patterns the index after having formed a doji pattern (indicating indecisiveness amongst market men) has formed a long black body candle on higher volumes. This indicates that the bias has shifted towards the sell side of the market.

Further the 15 day’s moving average has dropped below the 25 day’s moving average. The index continues to remain below its 5, 15 and 25 day’s moving averages. Moreover, the velocity parameters are also negatively trended. All these indicate a negative bias and the possibility of a further decline unfolding.

Incidentally, the index is approaching a major support level at the 4672 point's level. This could be a strong support level and there is a possibility that the index could reverse from there. However, if it declines below it, then a further decline could be expected. Investors are advised to avoid buying at current levels.

Work with strict stop losses on all positions.