Wednesday, June 30, 2010

Update on The Ultimate Momentum Signal - 30th June, 2010

  The System Signals a Sell ... !

Even though it was expected that the Nifty Futures may test the resistance band, it was not to be ! The test of the resistance band had already happened on Monday itself ! In  the last post it was stated that "all major market indices barring the Indian and the German DAX are trading below their respective 200 day moving averages at present and therefore, the market may fail in the test of previous highs."  On Tuesday the Nifty Futures opened lower at 5322.80 and traded steadily lower  to reach a low of 5240.10 and finally closed  at 5268.50. The futures were supported by the regression channel on Tuesday's trading. However, The Momentum Signal system has already indicated a sell as on Tuesday's trading and therefore, it may break the support on Wednesday's trading. Once the  support line is broken it may also act as the next resistance line.

Nifty Futures - Daily Chart

 
The Stop Loss for the sell signal remains at the previous high of 5388. The next support for the futures are at the 5100 to 5150 range where many daily and weekly moving averages are situated at present. However, a new low in the western markets of US and UK may induce further weakness or even the much expected medium term correction. ( Please see the US S&P 500 chart below ). Even though the Indian markets are one of the strongest in the world, if and when panic sets in, all markets are sold off and the correlation between them even rises to the maximum.
 
World Markets

In Europe the FTSE, CAC and DAX closed with heavy losses of 3.10, 4.01 and 3.33 percents respectvely. The FTSE closed at an eight month low on Tuesday. 

US S&P 500 Index - Daily Chart at 11.00 PM IST


The widely followed US S&P 500 index was trading at six month lows of 1040 at  around 11.00 PM IST as seen in the above chart. The fear Index VIX was trading at 34 levels increasing around 15 % for the day.


Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  29th June 2010, is given below.


The Momentum Signal  has indicated a sell as on close of the trade on Tuesday. It may also be noted that system had indicated an exit of all long positions as on the close trade on Monday. ( Please see the previous post for details ).


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 30th June, 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.
 
A close below 5223 may indicate maximum negative momentum for the Nifty futures as on the close of Wednesday's trading. For the corresponding levels of the indices, please  refer to the table above. 

 

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