Sunday, June 6, 2010

Update on The Ultimate Momentum Signal - 7th June, 2010

  The US Market Suffers Heavy Losses ... !

 The US Markets Intra-day Chart

After the release of  lower than expected jobs data, the US markets sold off steeply and closed with losses of three  percent on last Friday. The US indices closed at four month lows. The European markets too participated in the early part of the Friday's US led sell off.
The Euro currency too hit a new four year low on last Friday. Hungary too disclosed a higher than expected fiscal gap raising the fears of sovereign debt crisis again.
Asian markets are expected to react to the Friday's mayhem when markets open on Monday.

         Picture Source : Google Finance

 Indian Markets

Indian markets are set for a gap down opening on Monday. The million dollar question is what the market will do after the gap down opening. Previous experience shows that a market in a strong uptrend suffers such a jolt, it tries to regain the losses and the rally mostly resumes. Even though the Indian markets were on an uptrend when trading closed last Friday, it can not be treated as a strong uptrend. The uptrend was visible only in the daily charts and the weekly charts are some what neutral. Therefore, the answer to our question is still held by the international markets.  If the US markets were to sustain above the Friday lows and gain from there, Indian markets may recover. And if some more negative cues come from either Europe or the US, the present recovery may end.

Nifty Futures - Daily Chart  

The falling trend line of the regression channel and the 200 DMA at 5009 may provide some support to the market.

The Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  4th June 2010, is given below.

 The Momentum Signal returned a value of +100 last Friday.

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 7th 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 on Monday above 5057 and 5089 for the Nifty future and Nifty index respectively seem to bullish according to the Momentum Signal Trading System. The close values required for a sell signal are still far away.

As this blog has been repeatedly writing, risk levels in the markets are still higher than normal and therefore, trading in smaller lots and partially booking profits are in order.
Cheers and Prosperous Investing and Trading !!!

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