Thursday, July 15, 2010

Update on The Ultimate Momentum Signal - 16th July, 2010

   Another Close Below  5400 ..... !!!

The Nifty futures opened flat at 5390 on Thursday. The markets recorded a high of 5401.85,  equivalent to the breakout point, in the initial hour. Thereafter, it traded listlessly and recorded the low of 5362.25. The futures retested the day's high in the afternoon to record a new day high of 5407.50. However, both the indices, the Nifty and the Sensex could not trade above their previous resistance levels of 5400 and 18000. The futures closed flat at 5384.70. The day's trading range too remained very narrow at 45 points mostly confined to the previous resistance area turned support levels between 5360 to 5400 levels. As the Nifty futures have closed below 5400 for the second day in succession after the so called breakout, the chances of the breakout turning out to be a bull trap is increasing. ( Click here  to read the previous post for examples of breakout failures ).  As this blog had already stated, the market seems to trading mostly in the sideways mode. Therefore, the trend following indicators and systems may not be much suitable for the present market conditions. 

Nifty   Futures - Daily Chart 

The trailing stop for the long position remains at 5339 itself as there is no change to the high achieved yesterday.  In case the Futures trades below the 5350 levels, the next support may be at the 5300 to 5310 levels. 
 World Markets

The European stock indices, the FTSE, CAC and DAX closed with losses of 0.80, 1.41 and 0.97 percents respectively on Thursday. The US stock indices were trading with losses of 0.60 percents at 11.30 PM IST on the back of weak manufacturing data.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  15th July 2010, is given below.

The Momentum Signal has returned +100 value for the fourth day. However, the chances of the system exiting the present long position either by the activation of the trailing stop or by the indication of neutral  momentum are increasing. 

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 16th 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. 

As seen in the above table, a  futures close on Friday below 5354 level may indicate the exit of the existing long position. The closing values corresponding to a -50 value of the Momentum Signal has increased too.  

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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