Monday, April 18, 2011

Update for 18th April 2011

 Nifty Futures at Cross Roads Again !    

  • Last week, in a truncated week of of trading, Nifty futures traded all over the place and finally ended with a loss of some 35 points.
  • About two weeks back, this blog had indicated that the preferred immediate market direction would be somewhat flat and Nifty future may spend some time trading in the 5700 to 5950 area before trying to find the next major movement. 
  • It was also indicated that the positive momentum in the weekly charts may prevent the market from falling much and the Nifty futures may get support at the 200 DMA at 5730 levels.
  • Though the Momentum Signal trading system had indicated sells on last Monday and Friday, the outcome of even the latest sell signal is still subject to the above technical factors.
  • However, more of disappointing corporate results and more interest rate hike expectations  may adversely affect the market in the near term. Further fall in the U S Dollar index, however may help commodities and emerging markets on the positive side. 
  •  After considering all these factors, the immediate market direction remains a bit hazy at present.   

    Nifty Futures - Intra-day Chart

  • Following the disappointing earnings guidance by Infosys,  Nifty futures too sold off on Friday. Some of the pivotal stocks held their ground in the morning session. However, those stocks also joined the sell off when the higher than expected inflation data came out before noon on Friday.

   Nifty Futures  - Daily Chart 

  • Nifty future is still trading inside a narrow area supported by the 200 DMA at 5730 at the lower end and resisted by the falling trend line at the top around the 5950 levels.
  • After the formation of a bullish monster engulfing candle on last Wednesday, Friday's trading has lead to the formation of a slightly bearish Harami candle. 
  • Traders may again book part profits and/or hedge some of their short positions if any, at the lower end of the present trading area around the 5750 levels. 
  • However a break of the 5700 -  5750 area may see the Nifty futures revisiting the next major support levels at the 5550 to 5600 area.
S&P CNX Nifty Index - Weekly Chart

  • Barring one or two upward excursions, Nifty index has mostly traded inside the preferred shaded area envisaged in a post published some two weeks back. 
  • Two Doji like candles indicating a pause, indecision or even a reversal are seen in the weekly chart. 
  • Therefore, as already pointed out elsewhere on this post, the immediate direction of the market seems to be dicey at the best.   
   Nifty Options Scene   

The April series Nifty Options Put Call ratio ( PCR April series ) decreased to 1.17 times on Friday.

 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 22.09, 3.69 and  1.07 respectively as on  15th April, 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 has again indicated a sell as on Friday. As the the market direction seems undecided at the best for the reasons spelt out elsewhere, this sell signal may also become a whipsaw.

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 18h April, 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.
Click on the table above for an enlarged view.

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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