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Avoid Buying…

Tuesday, October 04, 2011

NSE India: S&P Nifty — Daily Market Report for: Tuesday (October 4, 2011)  (Based on the activity of the previous trading day) by Dominic Rebello

Review of the Previous day:
The Nifty fell substantially on Monday (October 03, 2011) a net 93.75 points (1.90%) and closed at the 4849 point level. The market opened down with a gap at the 4874 points level on weak global cues. It then rose by a few points and registered the day’s high at the 4879 points level at 9.16 a.m.  It then declined and turned into a range bound movement until 11.00 a.m. It then declined sharply and registered the day’s low at the 4823 points level at 12.34 p.m. It then rose and turned into a range bound movement until closing at the day. The Nifty moved in a range of 55 points and closed below the psychologically important 4900 points level. Sentiment was bearish and amongst the 50 Nifty stocks, 33 were losers, while 17 were gainers. All the sectoral indices closed in the red. Heavy selling was witnessed in realty, metal, banking and capital goods stocks.
   
Technical Analysis:   
Volume:   
 
Volume (Qty shares) decreased 21.67%. This change is substantial and indicates a less than full participation by investors.    
   
Market Breadth:   
Overall Market Breadth on the NSE was negative. Amongst all the traded stocks, 349 were gainers, 1064 were losers and 53 remained unchanged.   
   
Slow Stochastic Indicator:   
The Slow Stochastic Oscillator has declined in the neutral zone.    
The Slow K line in the Stochastic Oscillator has dropped below the slow D line (negative and a sell signal).    
   
RSI Indicator:   
The RSI is above the 40 level but is now declining (negative if it continues).    

MACD Indicator:   
The MACD is below zero and is now declining (negative if it rises). It has crossed below its 9-day Average (negative and a sell signal).   
   
ADX Indicator & DI Lines:   

The +DI line is below the –DI line and both lines are diverging (negative if it continues).    
The ADX is flat while the Market Index is falling. No signal here.    
   
Moving Averages (Trend Indicators)   
The index:

Has crossed below its 5-day average (at 4945) Negative.
Is below its 15-day average (at 4984) Negative
Is below its 25-day average (at 4993) Negative
Is below its 200-day average (at 5491) Negative.
All the four averages are negatively trended. Negative   

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 4690 marked as S1.
The next support is at 4450 marked as S2.   
   
Resistance Levels    
The immediate main resistance is at 5240 marked as R1.
The next resistance is at 5360 marked as R2.   
   
Pivot Point Analysis:   

For intra-day traders the support and resistance levels are calculated according to the pivot point theory and are:
Pivot point = 4851 (This is the level where the trend is likely to change during intra-day).
Support (1) = 4823.
Support (2) = 4796.
Resistance (1) = 4878.
Resistance (2) = 4906.

Outlook for Today:
On Japanese candlestick patterns the index has formed a second consecutive but small black body candle. The body of this candle is below and outside the body of the previous black body candle. This is negative.
Further, the index has crossed below the 5 days moving average. The index is now below the 5, 15, 25 and 200 days moving averages and all the four averages are negatively trended. Moreover, the velocity parameters, which were neutrally trended, have now turned negative. All these indicate the possibility of a further decline unfolding. Investors are advised to avoid buying at current levels.

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