Volume and price-Negative divergence

Nifty opened negative but recovered from its lows in the
second half of today’s session giving a Doji close in the
end. This signals that traders are indecisive about the
next move on the index. Nifty traded in the range of 5000-
5080, closing just above the 5050 mark, which is 78.6%
retracement of the fall from 5180 to 4538. Still the close
above this level is not convincing enough. Hence, Nifty
has to sustain above this level to gain further strength.
On lower side, 4940 and 4860 are the two crucial supports
which are holding Nifty up. So till these levels are
maintained we may see some buying on the lower side.
The interesting thing about this rally is that there is a
negative divergence between volumes and index price--
the price is rising at declining volume because of which
the whole move becomes a bit skeptical. So the volume
should support the further increase in price or else we
might see the downtrend resuming.
On the daily chart, Nifty is trading above its 20 daily
moving average (DMA) and 40 DMA at 4897 and 4961
respectively, which are now the supports in the near term.
The momentum indicator (KST) has given positive
crossover and is close to the zero line. The market
breadth, the number of advancing shares to declining
shares, was negative with 592 advances and 678 declines
on the NSE and 1,361 advances and 1,503 declines on the
BSE.
On the hourly chart, Nifty is trading above its 20 hourly
moving average (HMA) and 40 HMA at 5011 and 4891
respectively, which are now the supports in the short term.
The momentum indicator (KST) has given negative
crossover and is trading close to the zero line.
Nifty and Sensex ended in green marginally, up by 4 points
and 18 points respectively. Of the 30 stocks that make
the Sensex, Tata Consultancy Services (up 3.67%) and Hero
Honda Motors (up 2.41%) were the top performers while
ONGC (down 2.29%) and ACC (down 2%) were the weak
performers.