Daily Technical Market Report for October 21, 2009 - Afternoon Newspaper

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Daily Technical Market Report for October 21, 2009 - Afternoon Newspaper

NSE India : S&P CNX Nifty

The Afternoon Newspaper : Daily Market Report for: Wednesday (October 21, 2009)

(Based on the activity of the previous trading day)

By Dominic Rebello
 
Review of the Previous day: The Nifty fell moderately on Tuesday (October 20, 2009) a net 27.35 points (0.53%) and closed at the 5114 point level. The market opened up and continued so until 10:18 hours when it reached its day high at 5181 points. Then it fell and turned into a range bound movement until closing at the day. The market moved in a range of 77 points. Sentiment turned bearish in the latter half of the day and amongst the 50 Nifty stocks, 17 were gainers and 33 were losers. Buying was witnessed in metal, realty and some technology stocks, while selling was witnessed in oil & gas exploration, telecom, capital goods, private banking, pharma and cement stocks.
 
Technical Analysis:
 
Volume: (Qty shares) decreased 0.16%. This change is small and indicates a moderate participation by investors.
 
Market Breadth: Overall Market Breadth on the NSE was negative. Amongst all the traded stocks, 554 were gainers, 725 were losers and 28 remained unchanged.
 
Slow Stochastic Indicator: The Slow Stochastic Oscillator is in the over-bought zone. The Slow K line in the Stochastic Oscillator has dropped below the slow D line (negative sell signal).
  
RSI Indicator: The RSI is above the 60 level but is now declining (negative if it continues).
 
MACD Indicator: The MACD is above zero but is now declining (negative if it continues). It is below its 9-day Average (negative).
 
ADX Indicator & DI Lines: The +DI line is above the –DI line, but both lines are converging (negative if it continues). The ADX is flat while the Market Index is falling. No signal here.
 
Moving Averages (Trend Indicators)
 
The index:

Has dropped below its 5-day average (at 5125) Negative.

Is above its 15-day average (at 5051) Positive.

Is above its 25-day average (at 5000) Positive.

Is above its 200-day average (at 3859) Positive.

All the four averages are positively trended. Positive.
 
Overall Market Strength/Weakness: The indicators and oscillators discussed here are indicating a strong market but 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 = 5133 (This is the level where the trend is likely to change during intra-day).

Support (1) = 5084.

Support (2) = 5054.

Resistance (1) = 5163.

Resistance (2) = 5212.
 
 
Outlook for Today: On Japanese candlestick patterns the index after having formed a doji pattern (indicating indecisiveness amongst market men) has formed a small black body candle. This indicates that the bias has shifted towards the sell side of the market. Further, the index has dropped below its 5 day’s moving average. Moreover, the velocity parameters which were positively trended have now turned neutral. All these indicate a negative bias and the possibility of a further decline unfolding.

However, the index is above its 15, 25 and 200 day’s moving averages and all the averages are rising and are also positively trended. This is positive.

Incidentally, the index had neared a major resistance level at the 5193 points level, yesterday. It rose to the 5181 points level but turned down from there. This indicates that the index is facing resistance around that level.

Investors are advised to hold long positions but with a strict stop loss at the 15 day moving average, which is at the 5051 points level.

Work with strict stop losses on all positions.