Friday, February 11, 2011

Update for 11th February 2011

    Some Stocks Recover, But No Signs of any Reversal ?

  • Nifty futures opened lower at 5250 on Thursday. 
  • Most of the day's trading in the Nifty contract was confined in a trading range consisting of the reference / support of 5225 and the previous day's ( Wednesday's ) last traded price 5285.
  • Many highly oversold shares recovered some of their losses on Thusday.
  • However, the  previous day's rescuers of the market, in the form of the Nifty heavy weights like Infosys, Reliance, SBI etc, mostly fell on Thursday.
  • Advance declines data still  favored the negative side.
  • No capitulation of the heavy weights has happened yet. ( At this point no one knows whether a capitulation involving the index blue chips will occur or not ! )  
   Nifty Futures - Intra-day Chart 

    Nifty Futures  - Daily Chart 

  • Though the Nifty index is still falling almost daily, it seems that there is no free fall of shares in the large caps space.
  • One more day of losses in the Nifty index would lead to the index reaching the upward moving lower boundary of the old trading channel. 
  • This boundary was pointed out in various posts on this blog as a medium term target and support for the present intermediate term down trend. ( Click here to read the latest post in which the weekly chart of the index showing the lower boundary of the channel was exhibited. ) 
  • All previously indicated reference levels, ( 5125, 5225, 5350, 5450 etc ) are still valid for intra-day analysis and trading. Wednesday's last traded price and the Thursday's high being the same level, 5385 may also be used as a minor reference point for the time being.  
  • However, traders may please note that no support or resistances are infallible and markets can reach totally unexpected levels which are beyond anyone's imagination.
  • Nifty options open interest data seems to point towards some more losses in the market.
Nifty Options Scene  

The February series Nifty Options Put Call ratio ( PCR )  fell further to 0.80 on  Thursday following the sell off.  Though the market sold off, the India VIX  remained orderly. But the VIX index went down to close at 24.82, down  1.61 %. Some Put writing  ( increase in open interest )  was seen between the strike at 4800 to 5200. Significant Call writing was also seen  at the strikes at 5200 and 5300. The highest  open interest ( OI ) of February series Nifty Call options has remained at the 5400 strike. The highest  outstanding of February series Put options OI has moved down by 300 points to the 5100 strike on  Thursday.   This option OI data seems to suggest that market participants are expecting the market to trade in a wide range between 5100 and 5400  in the near term.  However, these indications may change any time before the expiry in accordance with the changes in the market.
Nifty Trailing Fundamentals     

The trailing PE multiple of Nifty index has also come down to yet another yearly low. However, it doesn't mean that stocks have become dirt cheap. It just means that stocks are cheaper in comparison with their earlier prices, which actually were very high.  The trailing Price Earnings Ratio  ( PE Ratio ), Price to Book Value ( PB Ratio ) and Dividend Yield ( DY Ratio ) of the Nifty Index  were at 20.10, 3.30 and  1.19 respectively as on  10th February 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 :

Momentum Signal has again closed at -100 area for the day.

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  11th February, 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 Signal, Entries and Exits, Position Limits, Risk Factors, Risk Analysis,  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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