Tuesday, December 14, 2010

Update for 15th December 2010

   Nifty Future Advances Further ! 

On Tuesday, Nifty futures opened exactly  where it closed on the previous day at 5931. In the initial phase till around 11.30 AM, the contract traded sideways mostly and kept itself below the resistance of 5940. It broke above the 5940 mark just after the announcement of a lower inflation figure. However, even after the breakout, trading remained mostly sideways. The day's high and low were at 5970 and 5906 respectively. The close was at 5959. The overhead resistances at  the 6000, 6030 and 6090 levels still remain valid. The following intra-day chart of Nifty futures show the two phases of Tuesday's trading, both before and after the declaration of inflation data.

  Nifty Futures - Intra-day Chart   

Nifty Futures - Daily Chart        

Nifty future may encounter resistance at the 6000 to 6030 area from a falling trend line which can be drawn by joining the previous two highs. ( This imaginary falling trend line is not shown on the chart above. )  Even though the day's range remained relatively narrow, advance decline ratio remained positive for the second successive day. Traders may again use the previously indicated reference levels of  5860, 5900 (new), 5940, 6000, 6030 and 6090 on Wednesday. In the absence of any further new scams, Indian markets may also join the Santa Claus rally being  enjoyed by most of it's international counterparts at present.

 Nifty Options  Scene     

On the back of improvement in the market internals, the December series Nifty options Put Call Ratio ( PCR ) also improved to a respectable 1.27 times on Wednesday. Significant additions to Nifty December Put option open interest ( OI ) were seen at the at the strikes from 5600 to the 6000 levels. The 5900 strike Put OI increased by 13.16 lakhs. The additions to Put OI at 5600, 5700, 5800 and 6000 strikes were 4.7, 3.7, 8.3 and 4.5 laks respectively. The Nifty Call OI increased at the 6000 and 6100 strikes to the tune of 5.6 and 4.9 lakhs respectively. The increase in the Put OI and subsequent increase in the PCR is indicating a moderately positive outlook to the market at present.

Nifty Trailing Fundamentals 

Nifty trailing valuations also increased on the back of the recovery. The trailing Price Earnings Ratio  ( PE Ratio ), Price to Book Value ( PB Ratio ) and Dividend Yield ( DY Ratio ) of the Nifty Index  were at 23.72,  3.75 and  1.05 as on  14th December 2010. ( More information and analysis on Nifty historical valuation is available from the "Nifty Fundas" page ).   

Latest Ultimate Momentum Signal

The updated Momentum Signal spreadsheet showing the latest signal values of the current month Nifty future and the Nifty index is given below :

The Momentum Signal  has become positive but remained in the neutral territory as on Tuesday. However, the chances of the Momentum Signal indicating a buy on Wednesday, with a value +50 or higher has increased. Readers may please take note that the Momentum Signal system has a tendency to indicate whipsaw trades in range bound markets.

Projected Momentum Signal Close Values

The projected levels of Momentum Signal values applicable to various ranges of closing values of the current month Nifty Futures, Nifty Index and the BSE Sensex,  as at the close of next trading day, ie. as on  15th December, 2010, are given in the following table. All readers are requested to take note that the table below is just a ready reckoner for the next day's Momentum Signal values and the figures are not intended to be interpreted as any targets for the Nifty futures or indices shown therein. 

Please click on the table to enlarge. For more info on the above table,  please click here.

Readers are requested to go through the Risk Factors, Risk Analysis, Position Limits and FAQs pages of this blog to gain a reasonable understanding of the trading system. Please do post your suggestions and comments on how this blog can be made more useful.
Cheers and Prosperous Investing and Trading !!!

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