Sunday, April 25, 2010

Update on The Ultimate Momentum Signal - 26th April, 2010

  Another Buy Signal, But Sensex Drags....! 

The Nifty Futures opened with some positive bias on last Friday and closed near the day's high at 5313. A buy signal has been flashed by The Ultimate Momentum Signal. However, The Signal has not indicated a buy for the BSE Sensex  leaving some doubts about the buy signal.  Moreover, the futures have closed higher for the last four days thereby leaving some chances of lower closings in the next two days.  The present buy signal has been triggered mainly by the strength of the SBI stock and other banking counters after the less than expected tightening by the RBI and some news on  the  re-capitalisation of some government owned banks. 

Nifty Futures - Daily Chart   

The Stop loss point for all Nifty futures long positions may be fixed at the Thursday's low at 5217.

Meanwhile, Reliance has come out with it's results and the same has been somewhat below the expectations of the analysts. The good news is that the gross refining margins ( GRMs ) may increase from here, especially after the crash last year. Reliance stock has been a drag on the market for the last ten months or so as it has been trading sideways in a range between 900 to 1200.  Recently the stock has been trading in a much narrower range between 975 and 1150.  (See the charts below ).

Reliance - Daily Chart  

As seen from the chart below, the stock is presently trading between it's long term moving averages and the short term moving averages. It's 200, 100 and 50 day moving averages are placed at 1036, 1047 and 1055 respectively. The stock has support from these averages at present. It's 20, 10 and 5 day moving averages are placed at 1096, 1089 and 1068 respectively. Any further rally by the index may require some more help from the market heavy weight Reliance.

Reliance - Daily Moving Averages Chart  

In world market news, the Dow index has closed higher for the eighth week. The Asian markets have been mostly trading downwards last week. European markets have also seen some sell offs last week as a consequence  to the continuing sovereign debt problems. However they traded higher last Friday on the strength of the US markets. As the US market is the only market which has not shown any weakness in the immediate past, barring the one day sell off related to the Goldman Sachs news  any weakness in the US markets may affect other markets more.

The Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  23rd April 2010, is given below.

The Momentum Signal has indicated a buy as on 23rd April, 2010.

Projected Momentum Signal Close Values

The projected levels of closing values corresponding to momentum shift / neutrality / continuation as on the close of trading on 26th 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.

As you can see from the table above, the minimum closing  values required for the continuation of the uptrend has increased and therefore the the present buy signal may turn in to whipsaw.The triggers for the resumption of the downtrend has also decreased significantly.

Cheers and Prosperous Investing and Trading !!! 

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