Tuesday, April 27, 2010

Update on The Ultimate Momentum Signal - 28th April, 2010

 The Futures Ends Lower In The Neutral Territory...!
The Greek Tragedy - Act II ... ? 

The Nifty Futures opened lower at 5304.80 following the weak cues from the Asian markets and traded higher in the initial hours on Tuesday. It achieved a high of 5333.90 and thereafter traded lower to close at 5307.60. This possibility of a lower closing in the neutral territory was pointed out in the last post. Tuesday's range was also confined to a meager 35 points. The Futures are still trading in the new upward moving regression channel. Please see the support  and resistance lines from the chart below. Even though this blog was expecting a higher closing on Thursday's derivative expiry, that possibility may be negated by the new developments in the sovereign  the debt crisis. We may expect a lower open for the markets on Wednesday.

Nifty Futures - Daily Chart       

World Markets     

Even though the Asian markets traded significantly higher on Monday, barring the Nikkei index of Japan, most Asian indices closed with significant losses on Tuesday. Meanwhile, the fears over the sovereign debt crisis has significantly increased in Europe following the cut in the credit rating of Greece to junk status by the Standard and Poors rating agency. The Greek bond spreads have hit new highs indicating higher risk perception by the investors. (The spread or Risk Premium is the difference in the interest yield between two bonds of similar maturity ). Credit default swap rate for Greek debts has also hit new highs. Raising the risk of a contagion, the risk premium on Portuguese bonds also rose to more than double the past year’s average this month. Portugal’s credit default swaps show investors rank its debt as the world’s eighth-riskiest, worse than for Lebanon and Guatemala. As a consequence the FTSE ( -2.6% ) , CAC  ( -3.82 % ) and DAX (  -2.7 % ) closed  with significant losses in Europe.

European Indices - FTSE  & DAX Daily Charts      

The US markets were also trading with losses following the rating cut by the S&P rating agency  even though housing prices have recorded an uptick for the first time in the last three years.  At the time of writing this post ( 10.30 PM IST ) the VIX index showing the implied volatility of  S&P 500 options has also spiked ( see the chart below ) indicating higher risk perception by the investors.

US Markets S & P 500 Index and CBOE VIX Index     


The Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  27th April 2010, is given below.

 The Nifty Futures and the Index closed in the neutral area for the second trading day.

Projected Momentum Signal Close Values

The projected levels of closing values corresponding to the momentum shift / neutrality / continuation as on the close of trading on 28th April, 2010 are given in the table below. The table also include the projected closing values of BSE Sensex corresponding to the momentum shift / neutrality / continuation signals.

 You can click on the table to enlarge. For more info on the above table,  please click here.
The closing values required for the resumption of the uptrend have decreased significantly and the trigger for a downtrend has moved upwards.

Please do write in your suggestions and comments about this blog.

Cheers and Prosperous Investing and Trading!!!  

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