google.com, pub-7808368332557457, DIRECT, f08c47fec0942fa0 The Ultimate Momentum Signal: Update on The Ultimate Momentum Signal - 28th July, 2010

Tuesday, July 27, 2010

Update on The Ultimate Momentum Signal - 28th July, 2010

 Another Day of Range Bound  Trading ... !!!

As expected, the Nifty futures opened in the positive territory on Tuesday and started the waiting game for the policy action by the RBI. The market spent most of the waiting period by trading around the last day's closing area. Then came the mild hikes in the interest rates which were  already discounted   by the market.  Barring a mild excursion in to negative territory, the market rallied almost to the previous day's high, once the uncertainty of the RBI action was done away with. However, the markets could not sustain the rally and therefore, it returned to the middle of the new trading range and closed at 5433. 

Nifty Future - Daily Chart 


The daily chart of the Nifty futures has recorded yet another doji candle which may indicate a reversal or range bound trading.  For a change, the BSE Sensex returned a solid white candle  of comparatively small trading range for the day. Tuesday's trading has not changed the technical position of the markets. The Futures and the major indices are still trading above their short term support levels. However, the Momentum Signal indicates that all of them have closed in the neutral territory as on Tuesday.

World Markets
Following the momentum of the strong gains in the past week, the European stock market indices closed in the positive territory on Tuesday. The FTSE, CAC and DAX gained 0.27, 0.83 and 0.21 percents respectively even though closing  prices  were off their intra-day highs. After three days  of more than 100 point gains, the  US DJIA too opened in the positive territory alongwith the other Wall Street indices. However, at 11.00 PM IST, the US stock indices were trading flat to the negative territory. Meanwhile, the US Conference  Board Consumer Confidence index for the month of July  has fallen to the lowest  since last February, amid worries about the lack of jobs.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  27th July 2010, is given below.

 The Momentum Signal returned a +30 value indicating neutral conditions for the 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 28th 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 all long positions remains at 5360 which is 2.1 % away from the new high. A close below 5381 on Wednesday will lead to the Momentum Signal indicating a sell with -100 value. However, this signal will be technically confirmed  only when the market  falls below the 5350 levels and trades there for some time with good volumes.

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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