Wednesday, March 9, 2011

Update for 9th March 2011

  Nifty Future Fills the Gap, Poised to Test Resistances ? 
  • We had indicated in the last post that if the gap between the candles of last Friday and Monday is not filled in the subsequent few days, Nifty futures may be forced to test the lower supports.
  • However, some easing of the political situation and the crude oil prices has helped the Nifty contracts to nicely fill the said gap on Tuesday.
  • Therefore, it seems that, barring any unforeseen developments, Nifty future may test the higher resistances at the swing high of 5600 - 5610. Beyond the swing high, the 200 DMA at 5670 may act as the next resistance.
  • Even if the contract surpasses this resistance, the 5800 level may act as a strong resistance being the upper boundary of the trading band.
  • Readers are once again requested to take note that even the best analysis and the trading system outputs are susceptible to become wrong, whenever the market goes in to a trading range. This is because of the fact that trading ranges are formed as a result of haphazard trading with sudden reversals, but mainly confined to a broad range. 
    Nifty Futures - Intra-day Chart

  Nifty Futures  - Daily Chart 

 Nifty Options Scene   

The March series Nifty Options Put Call ratio ( PCR )  improved and closed at 1.38 times on  Tuesday. The India VIX index  fell by  6.14 % following the rally and closed at 23.67, losing . Call open interest increased at the 5700 indicating some mild call writing. However, significant increase in the Put OI was seen at the 5300, 5400 and 5500 strikes on Tuesday. The 5700 strike has acquired the position of the strike with the highest level of March Nifty Call OI by Tuesday. The corresponding strike for Put OI is 5400. This data may be indicating the possibility of an immediate trading range between 5400 and 5700 with some positive bias.

 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 21.14, 3.50 and  1.13 respectively as on  8th March, 2011.  ( More information and a long term analysis on Nifty historical valuation are available from the "Nifty Fundas" page ). 

 Latest Ultimate Momentum Signal 
The Momentum Signal values in respect of the Nifty futures and the two indices, Nifty and Sensex, have moved  up again to to the +100 by Tuesday.

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  9th March, 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.
All readers are once again requested to note that the Momentum Signal trading system is susceptible to whipsaw trades in  ranged markets as is being observed now. 

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 !!!

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