Outlook for the Day: 21st July 2010

Benchmark indices went for a slight correction in today’s trading session. This could be the starting of the medium term correction and markets may take a dip before the expiry of the month commences. As suggested in our newsletters, the index was range bound for the whole session. The range between 5415-5335 was visible as suggested and this could be acting as a resistance and support to the index.

The ADX indicator, as already suggested in the previous newsletters is forming a rounding pattern. This would be a signal to a slow correction in Nifty. The +DI & -DI is also continuing with the direction towards a possible crossover which possible will provide an upper edge to the bears.

The MACD indicator has crossed on the sell side of the trade. As suggested, the position should be on the side of the crossover. However the benchmark is going to get strong near the short term moving average (20-EMA) near the 5325 levels for the sessions to come. In case of a severe correction, the Nifty would get a strong support near the medium term moving average (50-EMA). The MACD Histogram has penetrated into the negative domain, which would be acting as a sell signal for lower values of the histogram.

The Slow Stochastic momentum indicator is also moving towards the 50 levels. The momentum could be transferred to the sell side if these 50 levels are penetrated by the %K & %D lines. However a gradual decent would be leading to a slow trending correction in the benchmark index. We expect Nifty to trade in the range of 5395-5325.

TEAM SLT