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
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1 comment:

Markus Heitkoetter said...

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Ricky Johnson

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