Wednesday, August 4, 2010

Update on The Ultimate Momentum Signal - 5th Aug. 2010

   Expectations Not Belied ... !!!

Here is quote from the last post : "Belying all expectations of a probe of the 5465 to 5475 levels,  the Nifty futures traded almost absolutely flat for the entire trading day on Tuesday."

On Wednesday too, the Nifty futures traded almost flat till the last half an hour. It rallied in the last half an hour of trading fulfilling the expectations of a probe to  the 5465 to 5475 levels. The Nifty future closed at 5464, at a  new thirty month high. As the market is still  trading in a range, it remains to be seen how far the range will be expanded,  or in other words, whether there is any immediate upside.

Nifty Futures - Daily Chart  

S&P CNX Nifty Index - Weekly Chart

The above weekly chart of the Nifty index covers a period of twelve months. It is seen that the index has been mostly trading inside an upward moving channel for the past year. Even if the market attains new highs in the present rally, it seems that the top end of the channel will offer resistance to the market. Therefore, the upside of the market may be limited to the 5500 to 5550 levels. ( However, market being market, any irrational exuberance can happen and the rally may be extended too !! ).  Since the market is trading with rich valuations, traders and investors may reduce their leverage, if any, with their long positions.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on 4th August, 2010 is given below :
The Momentum Signal has returned to the buy territory as on Wednesday.

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  5th 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.   

"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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