Tuesday, February 22, 2011

Update for 22nd February 2011



 Yet Another Rally and What Now ?

  • This update includes only the bare essentials due to some constraints. Readers are requested to kindly bear with the short update.
  • Yet, this author is inclined to repeat some quotes from the previous post. " ....the market is still in the bullish area of the charts and some of the upward momentum might still be out there. Therefore, it seems that if the market is able to hold the 5400 level, it may recover and try to test the resistances above before deciding about the future direction by the time of budget."
  • And this is exactly what happened on Monday's trading.
  • Since this author was away from the trading action today, due to some personal exigencies, he is refraining from making any further market commentary in this update. However, all usual charts and data are still here. 
  • However, here is an unavoidable comment. Although the union budget might become a non-event from the market's point  of view, it might still attract some avoidable event risk. Therefore, traders are advised to keep only very light positions,  preferably of the long option type. The increase in the India VIX also points in to the direction of the market's self adjustment to face the perceived event risk associated with the budget. The increase in implied volatility ( IV ) as indicated by the India VIX may affect the profitability of any such long option positions negatively, if no significant movements happens in the market after the budget.
   Nifty Futures - Intra-day Chart   




     Nifty Futures  - Daily Chart 



 Nifty Options Scene 

  • The February series Nifty Options Put Call ratio ( PCR )  Increased to 1.12 on  Monday.  
  • The India VIX index also closed higher at 24.91, gaining 3.02 %. 

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 21.09, 3.49 and  1.13 respectively as on  21st 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 :



 The Momentum Signal has again closed at the +100  level on Monday.


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  22nd 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 also 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 !!!

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