Friday, July 2, 2010

Update on The Ultimate Momentum Signal - 2nd July, 2010

 End of the Fluke Rally and Another Sell Signal ... ?

As stated in the last post as a possibility, no followup of the NAV rally induced by the fluke European uptick was seen in the morning of Thursday. Therefore, the Nifty futures opened lower with a gap at around the  last traded value of Tuesday. The trading seemed to be in a two way mode of buying and selling. The futures finally closed at 5259. Neither the index or the future broke the Wednesday's low. However, neither could breakout about the Tuesday's closing price of 5268.50 either. It seemed that the market accepted the price ranges of Thursday and was a bit undecided about the future direction. Meanwhile, the Momentum Signal has again indicated that the market has closed at the sell territory.

Nifty Futures - Daily Chart

The Nifty future has closed outside the upward moving regression channel  on Thursday.

World Markets

The European markets closed with deep losses on Thursday. The FTSE, CAC and DAX closed with losses of 2.26, 2.99 and 1.81 percents. The US markets reached new year 2010 lows in the initial hours of trading on the back of disappointing employment, home sales and production data and were recovering at the time of this post. The US indices were trading with losses of 0.5 % at 11.30 PM IST. It seems that the  economic recovery achieved by the bailout money and other government incentives  may slowly fade and hence the market weakness.

This blog has been claiming that the Indian market is one of the strongest markets at present. Well, here is the proof. The following is a comparison chart of the BSE Sensex, US S&P 500 and UK FTSE. The chart covers a period of approximately five months. Some analysts have again started to push the great decoupling theory after observing the comparative strength. Last time this theory  was extensively (mis)used was in the late 2007 period and it was completely discredited by the following events. This blogger believes that when the panic hits the markets, all non-correlations may break. And this theory may again be discredited.

  Comparison chart of the BSE Sensex, US S&P 500 and UK FTSE

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  1st July 2010, is given below.

The Momentum Signal has returned a value of -100 as on Thursday.

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 2nd 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.

The closing values required for the continuation of the sell signal has come down. All readers of this blog are once again requested to read and understand all the intricacies of trading the Momentum Signal System and the risk factors. Please do write in comments and suggestion too.

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