Thursday, July 8, 2010

Update on The Ultimate Momentum Signal - 8th July, 2010

 A Day of Deference to the US Markets ...  !!!

With all round positive momentum in the Asian and the European markets, the US markets opened with a wide up gap on Tuesday. However, the US markets could not keep all the initial gains and it corrected, revisited the previous day's closing rates and even went down to negative territory a bit. The US markets closed with very mild gains overnight. In deference to the US markets, all other markets traded lower on Wednesday, including the Nifty futures. Accordingly the Nifty futures opened lower, traded lower and closed with losses.  

Now, what happens next ? Just look at the US markets ! The US markets were trading with good gains of around two percent on the back of higher earnings expectation from the retailers and financials.    It's so simple now ! The Nifty futures may open higher on Thursday. ( This post was compiled at 11.30 PM IST. )

Nifty Futures - Daily Chart

The Nifty future has traded inside the range of the bar / candle dated 30th June, 2010 for the last five days. The high and low of the range are at 5323 and 5225. As the future is trading inside  the 100 point range and has shown no inclination on the next direction, traders may wait for the market to resolve the issue before taking any big positions. However, the Nifty option markets seem to be indicating a positive resolution for the time being. It is seen that the lower strike options are trading richer ( costly ) than the higher strikes. This means that there is great demand for lower strike puts and the sellers are asking for comparatively higher prices. However, the market may become more stock specific as the earnings season starts  to kick in from the next week.  

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  7th July 2010, is given below.
The Momentum Signal  has returned a value of -100 for the day due to the fluke sell off. 
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 8th 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 which will return a positive momentum in accordance with the trading system are above present trading range. 

As the Momentum Signal is primarily a trend following system, flat and range bound markets may force the system to indicate false signals ( whipsaws ). All readers of this blog are requested to read and understand all the intricacies of trading the Momentum Signal System and it's risk factors. Please do write in your comments and suggestions. 
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