Friday, May 21, 2010

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

  A Failed Test of the 200 DMA and Now, Set for a Sell-off  !

The Nifty futures opened with some positive bias at 4946 and  traded lower in the initial hour to reach the Wednesday's  closing value . Later, it tried to test the 200 DMA as anticipated in the last post and reached the high of 4977. It sold off again to reach a low of 4915 which also  coincides with the 50 WMA as pointed out in the last posts. The futures closed at 4948 with some gains. 

The important point now is that it has closed below the 200 DMA for two days and the test of the DMA has failed. Now it is set for another sell off. The next support for the futures are at the 4675 - 4700 levels which coincides with the February 2010 lows and the August 2009 highs.

Nifty Futures - Daily  Chart 

World Markets 

Even though the European markets were trading with gains when the Indian markets closed, those markets closed with losses on Thursday. The US market has joined the sell off with the US indices falling as much as 5 to 6 percent intraday. At 11.55 PM IST the US indices were trading with losses of 2 to 3 percent. The fear index, VIX, was trading at 46 at a new recent high.

The Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  21st May 2010, is given below.

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 21st May, 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.
    Please click on the table to enlarge. For more info on the above table,  please click here.

All short positions in the Nifty futures may be protected with trailing stops which may be calculated by adding 2.1 to 2.5 % with the new low. The absolute stop is at 4904 as given in the last post.
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Cheers and Prosperous Investing and Trading !!!

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