Tuesday, July 13, 2010

Update on The Ultimate Momentum Signal - 14th July, 2010

  A Close Above  5400 ..... !!!

Even though this blog was of the opinion that the market may spend some time before attempting to break above the 5400 level, the market waited just five hours on Tuesday before the actual breakout. The Nifty futures opened at 5375 and the markets traded sideways for about five hours. However, when the European markets opened in the positive territory and started to rally, Nifty futures too joined in.  The futures went above the previous intermediate high of 5400 very easily at the very first attempt itself. However, the underlying index could record only a high of 5406 on Tuesday. Due to weakness of the IT pack, the BSE Sensex has not reached a new high too. However, the indices may also join the breakout when the trading  starts on Wednesday if  the positive momentum seen on the western markets is sustained overnight. 

Nifty Futures - Daily Chart   


As already explained in the previous two posts, the Nifty futures may encounter resistance at the 5550 levels. The previous intermediate high area of 5360 to 5400 may provide the support too. The above chart also shows the resistance offered by the middle line of the Andrew's Pitchfork drawn using the three points of  February 2010 low,  the April high and the May low. The middle line of the pitchfork too points to the immediate resistance at the 5550 levels.

World Markets 

The European equity markets recorded strong gains on Tuesday. The FTSE, CAC and DAX gained 2.01, 1.96 and 1.87 percents respectively. At the time of this post, ( 11.30 PM, IST ) the US markets indices were trading with gains of 1.25 to 1.50 percents. The Dow Jones index was trading at 10370 which also coincides with its 200 DMA. This level was also indicated as a possible resistance in the previous post.  Meanwhile, the fear index, the CBOE VIX was also trading at its 200 DMA placed at the 23.5 levels after sustaining an overnight loss of 6.5 %.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  13th July 2010, is given below.
 

The Momentum Signal has returned a +100 value for the second 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 14th July, 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.
 
The trailing  stop  position for long positions in the Nifty futures may be calculated by reducing 2.1 % of the new high from the high itself. ( Eg : High 5421.75 Less 2.1 % of 5421.75, i.e. 114 points resulting  the stop at  5308 ).  All readers of this blog are requested to read the various pages describing the system and understand all the intricacies of trading the Momentum Signal and it's risk factors. Please do write in your comments and suggestions. 




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