Sunday, September 5, 2010

Update on The Ultimate Momentum Signal - 6th Sept. 2010

   A New Week and A New Test of the Highs ... ?

Last Friday's trading in the Nifty futures was completely uneventful. The Nifty futures opened with a positive gap of 17 points at 5500. The open price also became the day's high. From the open itself it almost  became another reenactment of the previous day's trading. The futures hovered just near the previous day's last traded price. This has lead to a candle of very narrow range ( 30 points ) in the charts. Even though the futures broke below the previous day's low, in the absence of a corresponding break in the underlying index no damage was done. This blog has opined many a time that a break of 10 points in the Nifty futures above or below any particular reference point is of not much consequence according to previous experience.  The Nifty futures have traded in a narrow range just below the resistances for the past two trading days indicating a consolidation.  As the markets all over the world have gained in the past week, another test of the highs by the Nifty future is anticipated possibly on Monday itself or in the early part of the new week. Further direction of the market seems to depend on the outcome of the test. 

Nifty Futures - Daily Chart  

Last two day's trading has not changed the technical position of the markets. A breakout above the 5505 level may pave the way for a test of the previous high and resistance at 5550. The supports given in the previous posts and shown in the chart above remain unchanged.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  3rd  September, 2010 is given below : 

The market ( Nifty futures, Nifty Index and BSE Sensex ) has closed in the neutral territory as on 3rd September, 2010 as indicated by the Momentum Signal values of zero.

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   6th 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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To checkout the five year history of The Momentum Signal Spreadsheet click here
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