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Markets Bottomed Out?

Monday, August 26, 2013

NSE India : CNX Nifty — Daily Market Report for: Monday (August 26, 2013) By Dominic Rebello

Review of the Previous day:
The Nifty rose substantially on Friday (August 23, 2013) a net 63.30 points (1.17%) and closed at the 5471 point level. The market opened up with a gap at the 5428 points level. It then declined sharply into the red and registered the day’s low at the 5377 points level at 9.37 a.m. The index then bounced back into the green and turned into a range bound movement until 2.30 p.m. It then rose sharply and registered the day’s high at the 5478 points level at 3.16 p.m. and then turned into a range bound movement until closing at the day. The Nifty moved in a range of 101 points and closed above the psychologically important 5450 points level. Sentiment was bullish and amongst the 50 Nifty stocks 32 were gainers, while 18 stocks closed in the red. All the sectoral indices barring realty closed in the green. Substantial buying was witnessed in banking, oil & gas, consumer durables and auto stocks.

Technical Analysis:
Volume (Qty shares) decreased 13.35%. This change is moderate and indicates a moderate participation by investors.

Market Breadth: Overall Market Breadth on the NSE was positive. Amongst all the traded stocks, 830 were gainers, 485 were losers and 69 remained unchanged.

Slow Stochastic Indicator: The Slow Stochastic Oscillator has risen and has exited the over-sold zone.
The Slow K line in the Stochastic Oscillator is above the slow D line (positive if it continues).

RSI Indicator: The RSI rose and crossed above the 40 level and is now rising (positive if it continues).

MACD Indicator: The MACD is below zero but is rising (positive if it continues). It is below its 9-day Average (negative).

ADX Indicator & DI Lines: The +DI line is below the –DI line but both lines are converging (positive if it continues). The ADX is flat while the Market Index is rising. No signal here.

Moving Averages (Trend Indicators)
The index:
Is above its 5-day average (at 5399) Positive.
Is below its 15-day average (at 5551) Negative.
Is below its 25-day average (at 5702) Negative.
Is below its 200-day average (at 5844) Negative.
All the four averages are negatively trended. Negative.

Overall Market Strength/Weakness: The indicators and oscillators discussed here are indicating a weak market but with a positive bias.

Support Levels: For short-term traders the immediate main support is at the 5240 points level.
The next support is at the 5191 points level.

Resistance Levels: The immediate main resistance is at the 5604 points level.
The next resistance is at the 5695 points level.

Pivot Point Analysis:
For intra-day traders the support and resistance levels are calculated according to the pivot point theory and are:
Pivot point = 5443 (This is the level where the trend is likely to change during intra-day).
Support (1) = 5407.
Support (2) = 5342.
Resistance (1) = 5508.
Resistance (2) = 5544.

Outlook for Today:
On Japanese candlestick patterns the index has formed a second consecutive but small white body candle. This is positive.

Further, the index is above the 5 days moving average. Moreover, the velocity parameters which were negatively trended have now turned neutral. All these indicate a positive bias and the possibility of a further upmove unfolding. Incidentally, these may be the first signs of a bottoming out pattern. A crossover by the index above the 15 days average will confirm the same. Investors are advised to adopt a wait and watch policy, until a clear reversal signal is visible.

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