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Sunday, September 12, 2010

Update on The Ultimate Momentum Signal - 13th Sept. 2010

   A Continuation of the Bull Fury or Consolidation  ... ?

The markets gained on all day's of the previous truncated week of trading.  In the post dated 9th September, this blog had indicated that the resistance at 5625 may be broken. And it was broken as expected on the same day.  The possibility of an accelerating bull rally was also discussed in the post. Barring the freak trade at 5711 in the Nifty futures, the trading in the Nifty futures was normal. The futures opened higher at 5615 on last Thursday. In the initial seconds of the trading itself the freak trade was recorded. 

The Nifty futures revisited the previous day's last traded price during the trading day. The regular readers of this blog might be starting to notice that the previous day's last traded price is mentioned as an important reference point on this blog for the intraday movement of the Nifty futures. Well, it was the low and the best buying point on Thursday. 

   Nifty Futures - Daily Chart        


The above chart of the Nifty futures has been edited to avoid the freak trade to give a realistic picture of the markets. An accelerating rally on the back of the better than expected IIP numbers and good monsoon may   become a reality now. The capital goods sector may  lead the rally on Monday on the back of sudden jump in the growth numbers of the sector. ( However, the sudden jump in the data still remains to be explained. ) Traders may lookout for sharp rallies in the LT and BHEL scrips. However, another stupendous rally on Monday may force the markets to take a breather on Tuesday or so. Short positions are not at all advisable in a galloping market as strong bull markets have no resistances and they may rally much beyond all reasonable expectations !!

The Nifty index seems to have broken out off the eleven month old trading channel. However, another strong  rally above the 5650 level and the line acting as a support on a rebound are required to confirm this scenario.  

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  9th  September, 2010 is given below :
 

Nifty futures and the tracked indices have closed with the maximum upward Momentum 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  13th 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 !!!

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1 comment:

Life Is Fun said...

I guess NIFTY will hit 6000, even break all time highs by diwali, the correction is due and september series expiry might me around 5500 odd level so be cautious at higher levels

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