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Tuesday, April 20, 2010

Update on The Ultimate Momentum Signal - 21st April, 2010


  The Western Indices Are Not Selling Off ....!  

The Nifty futures opened with positive bias on Tuesday and traded sideways till the policy announcement by the RBI. The lower than expected hikes in the interest rate and the reserve ratios helped it to achieve the high of 5255.50. Some persistent selling was seen at the highs at 5255. Unable to trade higher the futures traded down to reach a low 5208, equivalent to the previous closing and finally closed at 5232. The futures have filled the gap on Monday and therefore, the downward target mentioned in the previous post is no longer valid now.

The implied volatility on the Nifty options seemed to be diminishing on Tuesday. This indicated lack of risk perception by the traders. The trailing stop is presently placed at 5270 level. ( Low 5162+2.1 % )

 Nifty Futures - Daily Chart       


Meanwhile the European markets have rallied and closed near their highs on Tuesday negating the one day sell off following the Goldman Sachs news. At the time of writing this post ( 10.30  PM IST ) the US markets were also trading higher. The S&P 500 index has not yet broken down from the upward moving regression channel. The CBOE VIX index has also gone down to the pre GS news levels.

US S & P 500 Index and CBOE VIX - Daily Charts


 
The Updated Momentum Signal Spreadsheet


The updated spreadsheet showing the Momentum Signal as on the close of  20th April 2010, is given below.


 

The Momentum Signal remained in the sell territory for the fifth 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 21st 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. The values required for the resumption of the uptrend have also moved significantly downwards. 

As the western markets are not seen joining the short term downtrend, the present downtrend may reverse in the Indian market. This raises the chance of fast covering rally. The trailing stop is at the 5270 level and is to be strictly observed. 

Cheers and Prosperous Investing and Trading !!! 
 
 

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