Thursday, July 15, 2010

Update on The Ultimate Momentum Signal - 15th July, 2010

  A Close Below  5400 ..... !!!

The Nifty futures opened higher at 5427 on the back of the positive momentum, on Wednesday and recorded the day's high of 5453.65 in the morning itself. However, the market could not sustain at the new highs. It started to drift but stayed above the highs of Tuesday till the opening of the European markets at 12.30 PM. Since the European markets were trading listlessly, the Nifty futures drifted further and finally closed at 5382. The BSE Sensex has not yet been able close above the 18000 level either. Now, the close below the breakout point of 5400 can either be a breakout failure or a normal small correction after the gains of previous four days. The European and US markets also  had a run of six consecutive days of gains till Wednesday.  Even though a breakout failure  is not ruled out, bulls may wait for some more time to check whether the market is trying to test the new highs.

Nifty Futures - Daily Chart 

The previous resistance range of 5360 to 5400 may give some support to the market in case of a mild correction. The next support may be at the 5300 to 5310 levels.

Nifty Futures - Weekly Chart

The above weekly chart of the Nifty futures shows the previous two occasions when the futures broke out above the previous highs and failed later.  However, the market never broke the previous low either.  Therefore, the market has recorded consecutive higher highs and higher lows.  These examples of breakout failures are shown here to help traders to understand what exactly happens when these happen. 

Indian markets have shown lesser volatility in the last year or so and the retail trading volume has seen the declining trend. It has affected the brokerages too. This means that the previous year has not been much profitable for retail clients  because of the range bound trading. The Momentum Signal system may also indicate whipsaw trades in markets like these when there is no follow up of  any trades indicated by the system.

World Markets 

The FTSE and CAC closed with minor losses of 0.33 and 0.13 percents on Wednesday. The German DAX, however, closed with minor gains of  0.30 percent. The US markets were trading with losses of up to 0.50 % at 00.00 hours IST.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  14th July 2010, is given below.

 The Momentum Signal has returned a value of +100 for the third consecutive 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 15th 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 for the existing long positions is at  5339. ( i.e. High 5453.65 Less 2.1 % of 5463.65 ). 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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Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

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