Friday, December 24, 2010

Update for 24th December 2010

  Holiday Trading At It's Best ?

In the last update, this author had indicated that market may trade in the sideways to mildly positive mode on Thursday. As expected, Nifty futures opened flat on Thursday.  But the expected test of the 6030 levels petered out at the previous day's last traded price of 6012. As any market in a holiday trading mood wont to do, Nifty futures too traded sideways for the whole trading day. The day's low was at 5981. The low of 5981 ramained above the lows of the previous two trading days. The last trade was at 5996. The following intra-day chart of Nifty futures shows the low volume listless trading seen on Thursday. 

   Nifty Futures - Intra-day Chart   

Nifty Futures  - Daily Chart  

The range of Thursday's candle has remained inside the previous two trading day's candles. Therefore, the last candle has become a classic inside day candle. Traders may, therefore, give more attention and importance to the break of the inside day candle and the range of the last three candles for breakouts. Since thin and  low volume holidays markets are pliable to be manipulated by big operators, traders may also remain watchful for any such sudden freak movements. Holidays markets have been  famous for stop running operations. It is an operation done by insiders by pushing the markets in a direction so that the commonly expected  stops  are triggered. Actually, the triggered stops would fulfill their covering operations. Since the holiday market is already thin and there are no more pushing, the markets may reverse just after the triggering of stops, paving the way for another operation in the opposite direction. Therefore, any  trades initiated on the breach of the inside day candle may need utmost care for the aforesaid reasons.

Since the technical position of the market has not undergone any changes, traders may again use the previously indicated  reference levels for  Friday's trading too. ( Click here to visit the update for 22nd Dec. 2010 ).

Nifty Option Scene   

The Put Call Ratio ( PCR ) of Nifty December series options increased slightly to 1.38 times as on Thursday. Some additions to the December Put option open interest  ( OI ) were seen at the 5900, and 6000 strikes. Similarly, some additions of December Call options OI were seen at the 5900, 6000 and 6100 strikes. The highest OI positions in the Call and Put options remain at the 6100 and 5800 strikes respectively.  The second highest levels of December Call and Put options open interest stand at the 6000 and 5900 strikes. These OI positions might be indicating  a range bound market between 5900 and 6000 strikes. The outer boundaries of the range seems to be extending to the 5800 and 6100 strikes. 
Nifty Trailing Fundamentals   

The trailing Price Earnings Ratio  ( PE Ratio ), Price to Book Value ( PB Ratio ) and Dividend Yield ( DY Ratio ) of the Nifty Index  were at 23.86,  3.77 and  1.04  respectively as on   23rd December 2010. ( More information and a long term analysis on Nifty historical valuation are 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 :

Momentum Signal has again closed with +100 value as at the end of trading on Thursday. Readers may please take note that the Momentum Signal system has a tendency to indicate whipsaw trades in range bound markets. This fact has already been  pointed out in various previous posts as well as in the Risk Factors

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  24th 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 to gain a reasonable understanding of the trading system. Please do post your  comments and suggestions on how new  posts can be made more useful.
Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

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

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1 comment:

Inventory POS System said...

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