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Friday, July 23, 2010

Update on The Ultimate Momentum Signal - 23nd July, 2010

 Finally, The Decisive Move ... !!! 

Even though the Wall Street tanked overnight on the "unusually uncertain" comments by the Fed Chairman Ben Bernake, the Asian markets did not fall much in comparison with their US counterpart on Thursday morning. Therefore, the Nifty futures opened slightly lower at 5388 on Thursday and tried to test the previous day's lows in the initial hours. By the time the European markets opened without much losses and almost traded flat, the markets tried to test the highs of the previous day. Finally, the markets broke out of the narrow trading range just after the 2 PM mark. The Nifty futures reached a high of 5459 for the day. It closed at a new thirty month high of 5448 for the day. The Momentum Signal has again indicated a buy after going in to the neutral territory for two days due to the flat trading of the markets. 


Nifty Futures - Daily Chart    


As the world markets are also rallying overnight, the market is expected to record new highs. However, traders may also lookout for the repetition of bull traps as happened earlier when the markets achieved new highs as part of slow and grinding rallies. As already been stated many times on these pages, the market may encounter resistance at the 5500 to 5550 levels.

World Markets

The European market indices closed with gains on the back of upbeat corporate earnings. The FTSE, CAC and DAX gained 1.90, 3.05 and  2.53 percents on Thursday. The US market indices were trading with strong gains of 2.10 to 2.50 % at 00.00 Hours IST. The CBOE Vix index was trading at 24.25 which was very near to it's 200 DMA. Any close by the VIX index below it's  200 DMA  at  23.40 will be considered bullish by the market participants.
Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  22nd July 2010, is given below.
The Momentum Signal has returned a +100 value for the last trading 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 23rd 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.   

Even though the market seems to have started the next leg of the rally, the closing values corresponding to sell signals have also increased and have reached almost the top end of the previous narrow trading range. 

As the Momentum Signal is primarily a trend following system, it may indicate whipsaw signals in range bound markets. As such, 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 too. Please do write in your comments and suggestions.




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