Friday, January 7, 2011

Update for 7th January 2011

      Market Loses Further Ground, But What Now ? 

As suspected and also indicated in most posts of this year, the banking sector and the interest sensitives  like the autos and capital goods stocks are becoming road blocks for the new year rally. Nifty future opened slightly higher at 6130 on Thursday. But the contract sold off immediately at the open, to reach the reference level of 6090. It spent some time above the 6090 level but, on the back of further losses in the banks, it broke the minor support at the 6080 to 6090 levels. However, the fall seemed to cushioned on the back of some strength seen in the market heavy weights Reliance, Infosys, TCS etc. We had indicated  in the previous post that if the major stocks continue to move in diverging directions, Nifty futures may trade sideways also. Nifty futures recorded a low of 6046 in a slow probing move in a market of diverging stocks but recovered to close at 6070 for the day.  

Nifty Futures - Intra-day Chart   

 Nifty Futures  - Daily Chart 

Nifty future has still some minor supports at the 6030 to 6040 area as seen from the previous trading action and from the 50 DMA. The immediate resistances are at 6090 and 6230.  In case of any recovery, traders may carefully check the market  action at the 6090 and 6230 levels, for the purposes of  intraday analysis and trading. The other reference levels indicated earlier also remain valid as of now.

      Nifty Options Scene

Consequent to more losses in the market, the January series Nifty options Put Call ratio fell  significantly  to  1.22 times as on  6th January 2011.  The highest number of Nifty Call option OI is at the 6200 strike. The highest open interest ( OI ) of Put options is still at the 6000 strike. The India VIX closed at 18.2, up 1.8 %. The following option Pain chart also seems to indicate mostly a range bound market between 6000 and 6200 for the time being.

 Nifty January Option Pain Chart

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 24.14,  3.81 and  1.03  respectively as on  6th January 2011. ( 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 :

After staying in the positive momentum area for fourteen days, Momentum Signal has closed with ' 0 ' values, indicating neutral momentum, as on the close of trading on 6th Jan. 2011 .

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  7th January, 2011, 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 !!!

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