Monday, April 19, 2010

Update on The Ultimate Momentum Signal - 20th April, 2010

Asian Equities Sold Off, But What About The Western Indices ..? 

The Nifty Futures opened at 5200 with a gap on Monday and it sold off in the morning session to reach a low of 5162. It rallied by the time the European markets opened and recorded the day's high of 5226. Please note that this blog had indicated the chances of some intraday spikes in the last post. The futures sold off from the highs and finally closed at 5204 recording a doji candle which  indicates indecision. It also left some of the opening gap unfilled. Today's gap of 20 points may indicate a downside target of 5073 which coincides with the 50 and 100 DMAs presently placed at 5080 - 5090 range. This target will be applicable only if the gap is not filled in the next few trading days. Since the futures have closed downward for the past five sessions an upward closing and the filling of the gap can happen at any time. ( This blog do not favour targets because of the difficulties in the prediction and the effects of unforeseen factors on the markets. )

The immediate next direction of the market remains a bit dicey because of three factors. First is the five downward closings already happened. The second factor is the effect of the RBI credit policy due to be announced during the trading hours on Tuesday. A 50 basis point hike in the CRR and 25 basis point hikes in the REPO and Reverse REPO rates seems to the consensus expectations at present. Any policy announcement which has been properly expected does not ordinarily move the markets. The unexpected moves the markets more.. !  The third factor is the effect of western markets.

 Nifty Futures - Daily Chart       

The Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  19th April 2010, is given below.

The Momentum Signal remained in the sell territory for the fourth day with  values of -100 for the futures and the index.

Projected Momentum Signal Close Values

The projected levels of closing values corresponding to momentum shift / neutrality / continuation as on the close of trading on 20th 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 upwards. The values required for the resumption of the uptrend have also moved significantly upwards.

As the futures have closed lower for the past five trading days and  because  of the news flow, traders may expect a volatile session on Tuesday.

Cheers and Prosperous Investing and Trading !!! 

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