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Tuesday, August 31, 2010

Update on The Ultimate Momentum Signal - 1st Sept. 2010

  Nifty Rebounds from the 5350 Support ... !!!

On the back of negative cues from the international markets, the Nifty futures opened lower at 5392 on Tuesday. It sold off further and broke the two day old support at 5390 to  test the support at the 5350 levels. Please note that charts on this blog had been showing this important one and a half month  old support for the past month or so. The Nifty futures recovered in a late rally from a low of 5356 to reach the day's high of 5414 at the closing time. The futures finally closed at 5399 with a loss of 30 points. Even though the markets closed after recovering some of the losses, the futures failed to reach the previous day's closing / last traded price by a wide margin. These kinds of subtle gaps have been pointed out in this blog in earlier posts too as signals of trend change. But Tuesday's subtle gap does not seem to imply much from the preliminary observation. If the international markets are providing positive cues on Wednesday, the futures may even fill the subtle gap and test the resistance zone at the 5450 - 5465 levels. The trading range for Wednesday may remain between 5350 to 5465. As seen and being pointed out on his blog  in the recent past, if the market fails in the test of an important resistance, it may test the support and vice versa. As such traders can expect two way trade in the new range between 5350 and 5465 for some time barring a covering rally above the 5465 levels.

Nifty Futures - Daily Chart


Even though the Nifty future broke below the 50 DMA during the last trading day, the last closes coincided with the support. Tuesday's market action has lead to the formation of  doji kind of candle which may indicate short term support or reversal on the daily charts. The lower panel of the above chart shows the various daily moving averages ( DMAs ) of   the Nifty futures.  The 20, 50,100 and 200 DMAs of the futures are placed at 5460, 5398, 5266 and 5177 respectively as on 31st August 2010. The futures may get supports at these various DMAs which are below the market and other previous lows in case of  a mild correction. Similarly, the 10 DMA at 5475 offers resistance too.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  31st August, 2010 is given below : 
 

Both the indices Nifty and Sensex and the Nifty futures have closed with -100 Momentum Signal values on Tuesday.


Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on   1st September, 2010, are given in the following table.
 
 
    Please click on the table to enlarge. For more info on the above table,  please click here.  
 
As matter of abundant caution, it is reiterated that the market may still be range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high if the markets remain range bound.

"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets may be trading in small ranges at the top end of a slow climb and for all practical purposes the trading may remain range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here
 
© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Monday, August 30, 2010

Update on The Ultimate Momentum Signal - 31st Aug. 2010

 Nifty Futures Between the 50 and 20 DMAs ... !!!

On Monday, the first day of the current trading week, the Nifty futures opened higher with a bang on the back of the late Friday's rally in the Wall street. As expected, the futures tested the first level of resistance at the 5460 level. The futures  traded above the 5460 level for a very short time at the opening. However, it could not sustain the gains and the correction set in right away. After hovering flat for some time below the 5445 levels it hit a low of 5391 by 2.30 PM, which was even below the previous day's lows. However, as the Nifty and Sensex did not break below the previous lows, the futures too recovered trapping the sellers who sold below the previous day's lows. The news about the retention of 0 %  long term capital gains tax status of equities in the new direct taxes code also helped the relief cum covering rally in the last hour of trading. The Nifty futures closed at 5429 with a premium of  12 points above the Nifty index.

Nifty Futures - Daily Chart


The five trading days old correction has brought the futures between the 50 and 20 DMAs. Monday's trading has not changed the technical position of the market.  If the international markets are giving out positive cues on Tuesday, the futures may again try to test the 5460 - 5465 resistance. However, it seems that  the chances of  a continuation of the downtrend is increasing day by day by the action of the market getting bought at every fall. ( Normally, if  a strong market goes for  a free fall, it rebounds even stronger trapping the bears and this condition seems to be absent now as we had three down days and two up days in the past five days. )  Another rally from the support of 50 DMA level  can not be ruled out yet.

The lower panel of the above chart shows the various daily moving averages ( DMAs ) of   the Nifty futures.  The 20, 50,100 and 200 DMAs of the futures are placed at 5461, 5397, 5266 and 5176 respectively as on 30th August 2010. The futures may get supports at these various DMAs and other previous lows in case of  a mild correction. 


Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  30th August, 2010 is given below : 


Because of the significant premium seen in the quotes of the Nifty future, the future has closed with a  Momentum Signal value of -50, whereas the index closed with a value of -100  on Monday.

Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on   31st August, 2010, are given in the following table.
 
    Please click on the table to enlarge. For more info on the above table,  please click here.  
 
As matter of abundant caution, it is reiterated that the market may still be range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high if the markets remain range bound.

"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets may be trading in small ranges at the top end of a slow climb and for all practical purposes the trading may remain range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here
 
 © 2010, momentumsignal.blogspot.com All rights reserved. 

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Sunday, August 29, 2010

Update on The Ultimate Momentum Signal - 30th Aug. 2010

 Nifty at the 50 DMA Support ... !!!

The Nifty futures opened flat on last Friday and as usual it tried to test the previous day's highs. However, it failed again to break 5490 resistance, which was mentioned in the last two posts. If the market fails to trade above a resistance level, it normally changes the direction and test the supports. The support at the 5450 - 5460 failed in the test and therefore, the market attracted sudden selling as pointed out in the  previous posts. The market has a tendency to retest the support it just broke. Nifty futures have also closed just above it's support from the 50 day moving average  ( DMA ) last Friday. The Nifty index and it's derivative have been trading above this support level for the past two and a half months. Therefore, futures may retest the 5450 - 5460 resistance on Monday. If it is able to trade above this level, it may again try to test the 5490 resistance.  

As the US markets have recovered last Friday on the back of Fed Chairman's positive statements, the chance of the Nifty futures retesting the resistances have risen.    

Nifty Futures - Daily Chart  


The lower panel of the above chart shows the various daily moving averages ( DMAs ) of   the Nifty futures.  The 20, 50,100 and 200 DMAs of the futures are placed at 5462, 5395, 5265 and 5173 respectively as on 25th August 2010. The futures may get supports at these various DMAs and other previous lows in case of  a mild correction.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on   27th August, 2010 is given below : 



As per the Momentum Signal system, Nifty future and the major indices, Nifty and Sensex, have closed in the sell territory with signal values of -100.

Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on   30th August, 2010, are given in the following table.
    Please click on the table to enlarge. For more info on the above table,  please click here.  




As matter of abundant caution, it is reiterated that the market may still be range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high if the markets remain range bound.

"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets may be trading in small ranges at the top end of a slow climb and for all practical purposes the trading may remain range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here

© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Thursday, August 26, 2010

Update on The Ultimate Momentum Signal - 27th Aug. 2010

    An Inside Day Candle ... !!!

The Nifty futures opened in the positive territory on the derivative settlement day and stayed there for the first half of the trading session. Unable to make much progress beyond the previous resistance level of 5490, the futures corrected to the previous day's lows by 3 PM. However, the indices, both Nifty and Sensex never broke thorough the previous day's lows on the settlement day. On the back of some rearguard buying action in some of the major Nifty stocks during the last half an hour of trading on the settlement day, the futures recovered and settled at 5478.  The Nifty index and the futures are still hovering above their 20 DMAs which also coincides with the support at 5450. The minor resistances are at the 5490 - 5505 levels.

Nifty Futures - Daily Chart  
Any fall below the 5450 level may attract selling and a break above the 5505 level may lead to re-test of the 5550 mark. 

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on   26th August, 2010 is given below : 


As per the Momentum Signal system, Nifty future and the major indices, Nifty and Sensex, have closed in the sell territory with signal values of -50.  However, as explained already, the sell signal is yet to be confirmed by the market action of the futures breaking the support at 5450. 

Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  27th August, 2010, are given in the following table.
                Please click on the table to enlarge. For more info on the above table,  please click here.  


As matter of abundant caution, it is reiterated that the market may still be range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high if the markets remain range bound.

"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets may be trading in small ranges at the top end of a slow climb and for all practical purposes the trading may remain range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here

© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Update on The Ultimate Momentum Signal - 26th Aug. 2010

   Is it the start of a big sell off ?

On Wednesday, the Nifty futures opened at 5495, slightly below the last traded price of the previous trading day. It never touched the  previous session's last traded price of 5508 and left a small subtle gap of 5 points in Wednesday's trading. As this blog has pointed out earlier, this kind of subtle gaps in the Nifty futures and the widely followed indices can act as indicators of trend change. During the session, the futures almost recorded a low of 5465 in the initial hours and tried to recover. However, the intraday recoveries failed to cross 5500 and finally the futures closed at 5465 near the day's low.

Even though this blog opined in one of the previous posts that the derivative settlement of the  Nifty futures may be near the 5500 strike levels than near or above 5550, according to the latest open interest data, it seems that it may even settle lower than the latest close but above the 5400 strike. It is seen that the open interest of the current month 5500 Nifty calls has increased during the penultimate day indicating heavy  selling. Similarly, the open interest of the 5500 puts has diminished significantly indicating the same.  

Is it the start of a big sell off ?

Even though it is not possible to conclude that the present correction is the start of of a big sell off, let us consider the facts pertaining to the question which were discussed in the various posts on this blog during the past month.
  • The easy liquidity driven FII buying is the only reason for the present uptrend.
  • Nifty index has reached a historical price earnings multiple of 23 times. The intermediate trend highs of the Nifty index during the past eleven years have mostly coincided with these kind of valuation.
  • The Nifty index has stayed above these valuations levels only twice in the past eleven years.
  • The Nifty index is correcting from the top end of an upward moving channel in which it has been trading for the past year.
  • The last three times it reversed from the top end  of the channel, the ensuing corrections were of the magnitude of 10 percentage points.
  • The present high of 5550 also coincides with the February 2008 high of the index which it achieved in the technical rebound  after the first down leg of  previous big bear market.
  • According to some leading indicators, India Inc growth may be moderating and the RBI is certainly on an interest rate raising  expedition.
  • All major developed market indices are technically  very weak at present.     
However, the confirmation of a downtrend is to be signaled  by the formation of lower lows and lower highs in the Nifty chart.

Nifty Futures - Daily Chart 



The lower panel of the above chart shows the various daily moving averages ( DMAs ) of   the Nifty futures.  The 20, 50,100 and 200 DMAs of the futures are placed at 5456, 5389, 5263 and 5167 respectively as on 25th August 2010. The futures may get supports at these various DMAs and other previous lows in case of  a mild correction.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on   25th August, 2010 is given below : 


The Momentum Signal in respect of the Nifty and Sensex indices have reached  the sell area value of -50 on Wednesday. However, the Momentum Signal returned a neutral value  in case of the Nifty futures.

Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  26th August, 2010, are given in the following table.

  Please click on the table to enlarge. For more info on the above table,  please click here.  

As matter of abundant caution, it is reiterated that the market may still be range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high if the markets remain range bound.

"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets may be trading in small ranges at the top end of a slow climb and for all practical purposes the trading may remain range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here
 
© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Tuesday, August 24, 2010

Update on The Ultimate Momentum Signal - 25th Aug. 2010


  The 5550 Resistance Still Stands Tall ... !!!

The Nifty futures opened at 5540 on Tuesday. The important resistance point of 5550 stood tall for the fourth successive trading day on Tuesday. Therefore, as envisaged in many previous posts on this blog, the Nifty futures tested the new support at the area between 4475 and 4490. It hit a day's low of 5480 within the support area and recovered from there to close at 5508 for the day. Tuesday's market action  seems to have  averted the scenario of a breakout above 5550 and the resultant  irrational exuberance and euphoria as described in the post dated 23rd August, 2010, at least for the time being.   The domestic institutions seem to have sold heavily on Tuesday's trading session. Meanwhile, the current month future has gone in to a premium against the discount seen in the recent past which indicates either buying or short covering at the end of the day.  


Nifty Futures - Daily Chart  


The international markets are still in a correction mode at present. The appearance of two star candles  followed by a break just below an important resistance can be termed as a bearish  pattern. However, one  day long correction will not usually signal the end of  a long rally. Hence, a retest of the recent highs and even a breakout above the resistance can not be ruled out completely. The Nifty future has support at  5450, 5350 and 5225 levels at present. Any close below 5450 is the minimum requirement for signaling a correction. The start of an intermediate downtrend is to be confirmed  by the formation of  lower highs and lower lows in the chart. 

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on   24th August, 2010 is given below : 


The Momentum Signal values remained at +100 and +80 for the Nifty future and the Nifty index as per the last traded prices on Tuesday.

Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  25th August, 2010, are given in the following table.


    Please click on the table to enlarge. For more info on the above table,  please click here.  


As matter of abundant caution, it is reiterated that the market may still be range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high if the markets remain range bound.

"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets may be trading in small ranges at the top end of a slow climb and for all practical purposes the trading may remain range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here


© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Monday, August 23, 2010

Update on The Ultimate Momentum Signal - 24th Aug. 2010

   One More Day of Flat Trading ... !

As expected, the Nifty futures traded more or less within the previous day's trading range on Monday too. The next direction of the market remains as unpredictable as ever. ( Please read the previous post for more comments on the present market conditions. ) The highest open interest in the current month Nifty calls are at the 5600, 5500 and 5700 strikes at present. Similarly, the highest open interest in the Nifty puts are at  5300, 5400 and 5500 strikes. It seems that, barring any unforeseen event, the Nifty may end near at the 5500 levels on expiry. This is just a guess on the basis of the open interest positions as on Monday and these are subject to change too.

Nifty Futures - Daily Chart 



Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on   23rd August, 2010 is given below :  

The Momentum Signal  has  been returning +100 values for the last three trading sessions. 

Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  24th August, 2010, are given in the following table.
                Please click on the table to enlarge. For more info on the above table,  please click here.  


As matter of abundant caution, it is reiterated that the market may still be range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high if the markets remain range bound.

"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets may be trading in small ranges at the top end of a slow climb and for all practical purposes the trading may remain range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here

 © 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Sunday, August 22, 2010

Update on The Ultimate Momentum Signal - 23rd Aug. 2010

  Another Flat Day, But Anything can Happen Now !!! 

Last Friday, the markets behaved just like what was expected of it !  Please note that his blog had opined that  at best the market can trade flat or test the new support in the area between 4775 to 4490 in the very short term. Therefore, the markets traded in the slightly negative to flat  area and remained just below the resistance at 5550 for the whole trading day. Now let us consider what happens next !

Due to the slowing recovery in the developed markets and the extreme cheap money policies followed almost all over the world, the FIIs are piling up on assets, even in the marginal emerging markets where economic growth is prevalent. It seems that these momentum pursuers are not concerned about the valuations.  The Nifty index is trading at a historical PE multiple of 23 plus now. Historically, it has remained steadfastly above these levels  only in  periods when retail euphoria and  asset price bubbles were present. The last two occasions it happened were in the years 2000 and  2008. 

Therefore, another bout of irrational exuberance and the resultant asset  price bubble is perfectly feasible.  It is reported that, even now, at these rich valuation  levels,  retail participation is lacking. Any further rally instigated by the FII  buying may attract the media  hype and the  retail crowd. Yeah, any asset price bubble has to end by trapping the retail crowd to hold the bag ! 

Further, the narrow nature of the trading in the Indian stock markets as analysed in the  two articles by the renowned journalist  Sucheta Dalal makes the matter a bit scary too. ( The two part article " How Hollow is the Indian Market " can be read by clicking the links below :



Now let's make the long story a short one ! " Anything is possible in the markets, and therefore, the rally may even accelerate throwing all cautions to the wind !! And it will be the best of  times to sell ( no shorting at all ) and liquidate stocks when everybody screams stock prices will never come down !!! "

Nifty Futures - Daily Chart


The Nifty future is still trading below the resistance at the 5550 level. It may even open above these level depending upon the international cues on Monday. Traders may try to be nimble footed as anything can happen from now on !

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on   20th August, 2010 is given below :  
The Momentum Signal  has  been returning +100 values for the last two trading sessions.

Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  23rd August, 2010, are given in the following table.

 Please click on the table to enlarge. For more info on the above table,  please click here.  
As matter of abundant caution, it is reiterated that the market may still be range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high if the markets remain range bound.

"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets may be trading in small ranges at the top end of a slow climb and for all practical purposes the trading may remain range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here

© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Thursday, August 19, 2010

Update on The Ultimate Momentum Signal - 20th Aug. 2010


  Another New Thirty Month High ... !!!


The Nifty futures opened near the previous day's last traded area on Thursday and remained flat for more than half an hour. However, by the end of first hour of trading, the previous day's momentum carried it over the 5500 levels . As the underlying index moved further upwards, the futures too moved up albeit   with a discount. Barring a small dip in the mid session, the markets held the gains and finally closed at 5528, another new closing high. As the 5550 area may still offer resistance and due to the late weakness  seen in the international markets, the futures may at best trade flat or move downwards to test the new supports at the 4475 to 4490 area in the short term. 

Nifty Futures -  Daily Chart 


Readers might be curious why this blog is marking 5550 as a resistance. Here is the reason. The last bull market's end started with a crash in the month of January 2008. The markets crashed from the 6325 levels to the 4425 levels in very short span of fifteen days in that month. The technical bounce which followed the first crash ended at the very same index level of 5545, in the month of February 2008. Thursday's new thirty month high also coincides with the same level of 5545. Please see the monthly chart of the S&P Nifty index below for more details.

S&P CNX Nifty - Monthly Chart 


Some readers may again be curious to ask whether markets have memories !  Well, the answer is a 'No'!! But the market participants have !!!

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  19th August, 2010 is given below :  


The Nifty future and the underlying index have closed in the buy territory as per the Momentum Signal system. ( Please also read the last parts of these post describing the limitations of the system in dealing with ranged markets. )
Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  20th August, 2010, are given in the following table. 

 Please click on the table to enlarge. For more info on the above table,  please click here.  
As matter of abundant caution, it is reiterated that the market may still be range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high. 
"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets are trading in small ranges at the top end of a slow climb and for all practical purposes the trading is range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here
© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Wednesday, August 18, 2010

Update on The Ultimate Momentum Signal - 19th Aug. 2010

  Another Test of the Highs ... !!!

Even though this blog was anticipating a test of the highs in the morning session,  it was not to be. ( Please see the previous post for details. )  The Nifty futures opened and remained range bound as usual till about about 2.00 PM on Wednesday.  Till that time the futures were confined to a very small trading range. However, the absence of any downtrend seems to have lead to a bout of panic short covering. Once the Tuesday's highs were broken, the futures never looked back and closed almost at the highest point of the day at 5492.  The close was at a new thirty month high too.
  Nifty Futures - Daily Chart 
As this blog has written many times in the past, the 5500 to 5550 area may offer resistance to the markets. 
Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  18th August, 2010 is given below :  
 
 
The Nifty future and the underlying index have closed in the buy territory as per the Momentum Signal system. ( Please also read the last parts of these post describing the limitations of the system in dealing with ranged markets. )
 
Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  19h August, 2010, are given in the following table.
 
 
 Please click on the table to enlarge. For more info on the above table,  please click here.  
 
As matter of abundant caution, it is reiterated that the market is still range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high. 
 
"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets are trading in small ranges at the top end of a slow climb and for all practical purposes the trading is range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here
 
© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Tuesday, August 17, 2010

Update on The Ultimate Momentum Signal - 18th Aug. 2010

 Another Day of Flat Trading ... !!!

Yours truly is at a loss on what to write about the trading these days. All right, here it is ! The Nifty futures opened flat, traded flat in  a narrow range and closed flat on Tuesday. 

Here are some random observations too ! The Nifty futures tested the day's  low of 5410 twice during the day. The second test happened  later in the day when the European markets were rallying. The test of the low seems to have failed, at least for the day, and therefore, it may try to test the highs once again. The late strength in the international markets seems to support this opinion too. Here is the follow up on the reported  uptrend seen in the true ranges which was mentioned in the last post. Well, Tuesday's low range bar seems to have nullified the uptrend in volatility.


 Nifty Futures - Daily Chart  



Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  17th August, 2010 is given below : 


The Nifty future and the underlying index have closed in the sell territory as per the Momentum Signal system. 
( Please also read the last parts of these post describing the limitations of the system in dealing with ranged markets. )


Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  18h August, 2010, are given in the following table. 
 
 
 Please click on the table to enlarge. For more info on the above table,  please click here.  
 
As matter of abundant caution, it is reiterated that the market is still range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high. 
 
"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets are trading in small ranges at the top end of a slow climb and for all practical purposes the trading is range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here
 
© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Monday, August 16, 2010

Update on The Ultimate Momentum Signal - 17th Aug. 2010

  The Indian Market Waiting for Directions ... ?

The Nifty futures opened at 5453 and it traded mostly in the positive territory for the first half of the trading on Monday. However, it started correcting by the middle of the day and even recorded a low of 5393, far below the previous day's low. It recovered some of the losses and finally closed at 5418 just below the low of last Friday's trading range.

The Nifty is being traded in a tight trading range for the last month or so. The India VIX, the Nifty options volatility index, hit all time low last week due to this reason. The implied volatilities of the Nifty options, which is measured by the India VIX, used to rule above it's US counterpart in the earlier days. Now the situation has reversed and the original VIX index, the CBOE VIX is ruling above the 25 mark whereas the India VIX is at 18 levels. However, the ATR ( Average True Range ) seems to on an uptrend for the past three or four trading sessions. The lower panel of the chart below shows the True Range ( TR ) in percentage terms and it's various moving averages. Any further increase in the ATR will be associated with a correction.

Nifty Futures - Daily Chart 



The Nifty future has closed in the sell territory as per the Momentum Signal system. ( However, readers are once again requested to go through the last paragraphs of this post to know more about  some limitations of the signal. ) The sell signal is yet to be confirmed by the market action as the trading is still confined to the month old range.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  16th August, 2010 is given below :  
 
 
Projected Momentum Signal Close Values

The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  17th August, 2010, are given in the following table.


 Please click on the table to enlarge. For more info on the above table,  please click here.  
 
As matter of abundant caution, it is reiterated that the market is still range bound by all effects and therefore, the risks of the system indicating whipsaw signals are extremely high. 
 
"Readers of this blog may please note the following  'Risk Factor' which is being  repeated almost daily these days. The markets are trading in small ranges at the top end of a slow climb and for all practical purposes the trading is range bound. Range bound markets are not suitable for the  profitable trading of the Momentum Signal system."
 
"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."

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here


© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.