Thursday, September 2, 2010

Update on The Ultimate Momentum Signal - 3rd Sept. 2010

    Nifty Getting Bogged Down at 5505 ... ?

As expected the Nifty futures opened with a gap on the back of strong rallies across the equity markets and recorded the day's high of 5509.90 at the opening itself on Thursday. If a market opens outside the previous day's range, it can either trade in the direction of the opening trade, it can remain and keep on trading around the opening range or it can revisit the previous range and close the gap and trade to whichever direction from thereon. The Nifty futures seems have opted for a combination of the latter scenarios on Thursday.  Therefore, the last trading session can be summarised as follows. The futures traded flat just below the open in the first half of the session, made an excursion to the previous day's last traded value in the middle of the session, then made a test of the open value which also coincided with the5505 resistance and finally reversed from the resistance area ( at least for the time being ) and finally closed at 5483. Thursday's trading has lead to the formation of shooting star model candles with tails placed at the top end in the charts of Nifty and Sensex, indicating  selling pressure at the resistance area.  Therefore, a test of the minor supports below or even the formation of lower high and more correction from thereon can't yet be ruled out. 
Nifty Futures - Daily Chart 


The Nifty futures have strong resistance and support at 5550 and 5350 respectively. It has minor resistance at 5505 and minor supports at  5450 and 5390.



Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  2nd  September, 2010 is given below :  
 
 
According to the Momentum Signal system the last closing values are placed at the neutral territory.

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   3rd 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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