Thursday, July 8, 2010

Update on The Ultimate Momentum Signal - 9th July, 2010

 A Day of Gains, but a Finish Near the Day's Low ...  !!!

As expected the Nifty futures opened at 5311 with a gap near the high of Tuesday . The futures even  rallied further to reach a high of 5339.50 by the mid-day. However, it could not hold on to the morning's gains and finally closed at 5305. Thursday's trading has resulted in to a shooting star kind of doji candle, which normally indicates a reversal or price rejection at the higher levels. Therefore, Thursday's market action has failed to instill the confidence of the bulls.

Nifty Futures - Daily Chart 

Even though the future has traded above the tight range of last six trading days, it still closed inside the range. The Nifty future has strong resistance above in the 5360 to 5400 range. It has support at 5225 too. If international markets do not spook the existing positive momentum, the  futures may again try to test the resistance range.

World Markets

The IMF has upgraded the forecast of world GDP growth for the year 2010 to 4.6 %  against a contraction of 0.6 % in the year 2009. The European stock indices of FTSE, CAC and DAX closed with gains of 1.81, 1.57 and 0.71 percents on Thursday. The US market indices were trading with flat to 0.50 percent gains at 11.30 PM IST. 

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  8th July 2010, is given below.

 The Momentum Signal has returned a value of -20, indicating neutral momentum.

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 9th 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 required closing values corresponding to Momentum Signal values of  +50 as on the close of trade on Friday has moved down and are just below the closing prices of Thursday. Some more sideways trading seems to be the order for now.

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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