WEAKNESS PERSISTS...

By Dominic Rebello

Review of the Previous day: The Nifty fell marginally on Wednesday
(October 28, 2009) a net 20.55 points (0.42%) and closed at 4826 point
level. The market opened down, then turned up and continued so until
12:34 p.m. when it reached its day high at 4867 points. Then it fell
and turned into a range bound movement until closing at the day.

Infact, the Nifty slipped and fell below the 4800 points level but
recovered and closed above the 4800 points level. Sentiment was
bearish and amongst the 50 Nifty stocks, 31 were losers, while 19 were
gainers. Heavy selling was witnessed in private banking, power, metal,
cement, select auto and oil & gas stocks, while some buying was
witnessed in realty, technology, pharma and PSU banking stocks.

 Technical Analysis:

Volume:  (Qty shares) decreased 6.48%. 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, 496 were gainers, 775 were losers and
27 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 is above zero but is declining (negative if
it continues). 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 4925) Negative.

Is below its 15-day average (at 5020) Negative.

Is below its 25-day average (at 5016) Negative.

Is above its 200-day average (at 3920) 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 = 4826 (This is the level where the trend is likely to
change during intra-day).

Support (1) = 4785.

Support (2) = 4743.

Resistance (1) = 4867.

Resistance (2) = 4909.

( For support and resistance levels for all F&O stocks refer to the
Afternoon newspaper)

Outlook for Today: On Japanese candlestick patterns the index after
having formed two consecutive black body candles has formed a doji
pattern. This indicates indecisiveness amongst market men. The next
candle formation will confirm whether the bias is towards the buy or
sell side of the market.
However, the index is below its 5, 15 and 25 day’s moving averages.
Moreover, the velocity parameters are also negatively trended. Both
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.

Courtesy: The Afternoon Newspaper