Daily Market Report for Friday (June 17, 2011) Weakness Persists ... By Dominic Rebello

Review of the Previous day: The Nifty fell substantially on Thursday (June 16, 2011) a net 50.75 points (0.93%) and closed at the 5396 point level. The market opened down with a gap at the 5419 points level on weak global cues. It then turned into a range bound movement until 12.10 p.m. It market then rose sharply and registered the day’s high at the 5447 points level at 12.22 p.m. as the hike of 25 basis points by the RBI was factored in by the market. It then declined sharply due to weak opening in the European markets because of the Greek debt problem and registered the day’s low at the 5389 points level at 3.13 p.m. It then turned into a range bound movement until closing at the day. The Nifty remained below its previous close throughout the day and closed below the psychologically important 5400 points level. Sentiment was bearish and amongst the 50 Nifty stocks, 35 were losers, 15 were gainers. All the sectoral indices closed in the red. Heavy selling was witnessed in IT, technology, capital goods, metal, and consumer durables stocks. Technical Analysis: Volume (Qty shares) decreased 1.30%. 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, 422 were gainers, 967 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 is below the slow D line (negative if it continues). RSI Indicator: The RSI fell and crossed below the 40 level and is now declining (negative if it continues). MACD Indicator: The MACD is below zero and is now declining (negative if it continues). 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 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 5462) Negative. Is below its 15-day average (at 5507) Negative. Is below  its 25-day average (at 5479) Negative Is below its 200-day average (at 5757) 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 5135 marked as S1 (blue line below the Index). The next support is at 4795 marked as S2 (blue line below the Index). Resistance Levels: The immediate main resistance is at 5982 marked as R1 (red line above the Index). The next resistance is at 6357 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 = 5411 (This is the level where the trend is likely to change during intra-day). Support (1) = 5375. Support (2) = 5354. Resistance (1) = 5433. Resistance (2) = 5469. (For support and resistance levels all F&O stocks refer to the Afternoon Newspaper or Click here) 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 5 days moving average has dropped below the 25 days moving average. The index continues to remain below the 5, 15, 25 and 200 days moving averages and all the four averages are declining. Moreover, the velocity parameters are also negatively trended. All these indicate a negative bias and the possibility of a further decline unfolding. Investors are advised to avoid buying at current levels. Work with strict stop losses on all positions.