Friday, April 16, 2010

Update on The Ultimate Momentum Signal - 16th April, 2010

   Well We Did Trade Down, But Do We Have to be Alone....!

This author had expressed skepticism in the previous post about the sell signal as on Tuesday and suggested that the market may try to test the highs. Well the markets opened higher to test the highs and failed. Then it sold off belying the skepticism and closed at 5275. Now the question is whether the Indian market alone goes in to an intermediate downtrend  when the western markets are still moving upwards. Is this a temporary disconnect or of a permanent nature ?   Well, some of the Asian markets were not exactly moving in tandem with the western markets off late. Are we going to join them ? Traders can still keep a bit of the skepticism for the reasons that it helps in trading and it may keep them watching out for sudden reversals against the position.

Nifty Futures - Daily Chart  

The previous support line at the 5305 to 5310 level may act as the new resistance line.


The Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  15th April 2010, is given below.

The Momentum Signal remained in the sell territory with a value of -50 for the second day.

Projected Momentum Signal Close Values

The projected levels of closing values corresponding to momentum shift / neutrality / continuation as on the close of trading on 16th April, 2010 are given in the table below. The table also include the projected closing values of BSE Sensex corresponding to momentum shift / neutrality / continuation.

   Please click on the table to enlarge. For more info on the above table,  please click here.

The triggers for the end of the downtrend have moved downwards and the values are very near to the last traded prices. The values required for the resumption of the uptrend have moved significantly upwards.The chances of the present sell signal becoming a whipsaw is still there.  Readers of this blog may please note that any momentum indicator may generate  many whipsaws in the markets, wherein the long slow moving rallies may take place. Accordingly, the Ultimate Momentum Signal is also susceptible to whipsaws if the present condition continues. The said fact is already listed in the Risk Factors page of this blog and the same is reproduced here :
Risk Factor 4 :  It is also seen that even if the momentum signals a downward shift by signaling -50 value, in some cases, especially in strong long term bull markets, the momentum shifts again to the opposite within a very short time. In strong bear markets, the opposite may also happen.

Cheers and Prosperous Investing and Trading !!! 

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