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Thursday, September 16, 2010

Update on The Ultimate Momentum Signal - 16th Sept. 2010

   Bull juggernaut yet to take a breather ... !!!  

The bull juggernaut, the possibility of which was envisaged by this blog as a mad scramble to get in to stocks  if Nifty breaks above the eleven month old trading channel or another bout of irrational exuberance ( please see the posts dated 23rd Aug. and 9th Sept. 2010 ),  continued on Wednesday too. The Nifty futures opened near Tuesday's last traded price and immediately tried to test the previous day's highs. It reached the high of 5875 before noon and traded in a narrow range to close at 5861.50 for the day.  The Nifty futures have recorded gains in seven consecutive days. This raises the chances of a deceleration in the gains  or a consolidation for one or two days. However, the markets may still continue to gain after the consolidation because of the very strong momentum seen in the charts.


   Nifty Futures - Daily Chart     


Now let's try to calculate an immediate  target to the current rally.  According to the traditional gap theory in technical analysis, the range of the market above a gap may equal to the range below. Hence the next target for Nifty futures may be calculated as 5960. This target is calculated by adding the range below ( 5640 - 5350 = 290 points ) to the lower end of the gap at 5670. However, this is subject to  the condition that the rally continues without the gap being filled. And the formation of the gap itself is questionable because of the fact that the editing done to the above chart to screen out a freak trade which occurred on the day before the gap. Traders may not give much importance to this target, but to the method of the analysis in the traditional technical studies. In the Japanese candlestick charting method, gaps are called windows and both  the ends of  a gap ( 5640 and 5670 ) are considered as supports or/and resistances as the case may be.  As a final word on gaps, it is also said in technical analysis that,  ultimately, all gaps gets filled more or less.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  15th  September, 2010 is given below : 

Nifty futures and the tracked indices have closed with the maximum upward Momentum Signal values of +100 for the seventh consecutive day.


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  16th 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.  

The trading stop for long positions under the Ultimate Momentum Signal system  stands raised to   5751 ( i.e. 5875 minus 2.1 % of 5875 ). 

 

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2 comments:

Forecasting Markets said...

The markets are giving hidden message that the SENSEX and NIFTY are sell, for those who just watch the index and participate in the market, these would be a big mistake

momentumsignal said...

Hi Forecasting Markets

Would you please explain the hidden messages given out by the markets for the benefit of this author and the other esteemed readers ?

Hey this blog is more of an educational and informational one than to give anyone any tips.
BTW, tips are supposed to be for waiters.
For traders, they may require good analysis with reason. Analysis may fail but the logic behind that leads to trader development.

Best wishes