Sunday, July 4, 2010

Update on The Ultimate Momentum Signal - 5th July, 2010

 Bracing for the Effects of the Rate Hike ...!

Last Friday the RBI hiked the repo and reverse repo rate by 0.25 % each. Since the hike was expected to some extent and the fact that the hike was announced after the banks fixing new base rates, the hike's  immediate  effects on the market remains a bit dicey. Whichever be the verdict of the market, the Nifty future may open lower on Monday.

Last Friday Nifty futures opened  at 5254, near the Thursday's close, and immediately tried to rally. But it could not rise more than 10 points above the Thursday's high of 5275. This blog has repeatedly pointed out that a 10 to 15 point breach of any important support or resistance may fail and those failures are opportunities for day traders to enter in to breakout failure trades. The Nifty futures failed in it's intra-day rally and finally closed at 5243 near the day's low.

Nifty Futures - Daily Chart   

The Nifty future is hovering above it's 20 DMA at present. A decisive break of the 20 DMA may lead the futures reaching the next support levels at the 5100 to 5150 range where the 50 and 100 DMAs  are situated at present.

S&P Nifty Index -  Weekly Chart

The Nifty is trading in an upward moving channel  as seen in the above chart for the past eight months. The last two weekly candles have been either a doji or an evening star doji indicating weakness. The 20 week MA  and the 50 week MA are placed at 5155 and 5006 respectively at present.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  2nd July 2010, is given below.

The Momentum Signal has returned a value of -100 indicating maximum downward momentum for the second 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 5th 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 closing values required for the continuation of the sell signal have moved upwards.  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 your comments and suggestion too.

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