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Tuesday, May 31, 2011

Update for 31st May 2011


    The Test of 20 DMA is On !

  • Nifty futures closed flat yesterday, just below the 20 DMA.
  • Generally speaking,  the 15 or 20 DMA acts as support or resistance in short term trends, in the daily  charts.
  • As such, the positive scenarios described in the last post is dependable on a successful test of the 20 DMA by the Nifty future. As on Monday, the 20 DMA closed at 4480.
 Nifty Futures - Intra-day Chart    

 

      Nifty Futures  - Daily Chart  

Sunday, May 29, 2011

Update for 30th May 2011




   Has Some More Strength left in the Latest Bounce  ?

  • As indicated in the previous post, Nifty future has bounced from expected support of the 5350 - 5400 area, albeit after a mild crack. 
  • This area had recent supports from both technical and fundamental points of view.
  • Now the question is whether the bounce has the fire power to rally more ! In the last post, it was mentioned that since the bounce came from the supports, it may try to test the middle area of the old trading channel. 
  • Now, let's continue the scenario analysis  with the help of various charts, data and the Momentum Signal.    

 Nifty Futures - Intra-day Chart     



     Nifty Futures  - Daily Chart  



S&P CNX Nifty Index - Weekly Chart


Friday, May 27, 2011

Update for 27th May 2011



   Nifty Futures In the Green !

Nifty future has bounced back from the previously indicated support zone of 5350 - 5400, though the lower end of the zone was  slightly broken on last Wednesday. Although it was indicated in the previous post that some of the stocks would be coming under negative pressure from the derivative expiry and therefore, the expiry would be near the strike of 5300, it was not be. This guess was made due to new selling seen in in the money (ITM) 5300 call options on last Wednesday. However, massive covering of ITM 5300 calls were seen during the trading of Thursday, right from the beginning, invalidating the previous guess.

Now the important question is whether the present bounce is a change of trend or not. At present it is difficult to predict, except for accepting the facts of the reasonable support of the 5350 - 5400 base and also the support of the lower boundary of the old trading channel. Moreover, trailing valuations are also at around the one and a half year lows. Therefore a rally to the middle of the  trading channel can not be ruled out at present. Anyway lets see what the Momentum Signal indicates in the next few days !

Nifty Futures - Intra-day Chart    



    Nifty Futures  - Daily Chart  


Thursday, May 26, 2011

Update for 26th May 2011


    The Derivative Expiry is Here !

An expiry of derivative contracts for the month of May, in which bulls have made heavy losses, is here. Expiry related negative pressure can be expected on many stocks in the afternoon session. Nifty future is expected to expire near to the strike of 5300 than 5400 in these circumstances. ( Please see the Option Pain chart of May series Nifty options elsewhere on this post. )

Nifty Futures - Intra-day Chart     



    Nifty Futures  - Daily Chart  


  Nifty Options Scene   

The May series Nifty Options Put Call ratio ( PCR May series ) decreased slightly to a below normal and bearish looking 0.55 times on Wednesday. The below normal PCR may indicate the negative bias of the market. 
 
May Series Nifty Option Pain Chart  
 
 
 

Wednesday, May 25, 2011

Update for 25th May 2011



   The Slow Drift Continues !

It seems that there is no buying interest as such in the market due to the current economic situation of slowing growth, rising costs and interest rates and above all, the new worries on the Euro sovereign debt front. Market is slowly drifting due to the lack of buying interest than by any heavy selling. May be, lower prices are required to elicit the buyers' interest. As such the downtrend may continue with occasional technical bounces.

Nifty Futures - Intra-day Chart      



    Nifty Futures  - Daily Chart  


Tuesday, May 24, 2011

Update for 24th May 2011



   Nifty at the 5350 - 5400 Support Area !


Nifty futures have reached the earlier indicated support area of 5350 to 5400. The trailing Price Earnings Ratio ( PER )  has also reached  it's one and half year lows. The index has support from the lower boundary of the old trading channel ( see the weekly chart in the previous post ) below the present levels. Another support is from the previous swing low area at 5175 to 5225. If the index could remain inside the trading channel we may see a bounce from these areas. However, a break of the old trading channel may lead to a much deeper correction. Therefore, it remains to be seen whether the Nifty index could remain inside the trading channel if slowing growth and profits continues.  

    Nifty Futures - Intra-day Chart 



    Nifty Futures  - Daily Chart  


Monday, May 23, 2011

Update for 23rd May 2011


   Will the 5400 Support Hold ?

Here is the latest update of the Momentum Signal trading system. This update is kept at the minimum due to the author's preoccupation with other matters.

    Nifty Futures - Intra-day Chart  



    Nifty Futures  - Daily Chart  



S&P CNX Nifty Index - Weekly Chart

 

Friday, May 20, 2011

Update for 20th May 2011



   The 5400 Support Holds for the Time Being !


  • As indicated in the previous posts, the top end of the 5350 - 5400 support range has so far held and Nifty future have started recovering. But, the medium term trend is still downwards and the chances of it resuming are still there if the present recovery dissipates. 
    Nifty Futures - Intra-day Chart



    Nifty Futures  - Daily Chart  


Thursday, May 19, 2011

Update for 19th May 2011



  •  Nifty futures have almost reached the earlier indicated support zone of 5350 -5400. The trailing Price Earnings ratio has also reached 20.18 and is  near it's  one and a half year lows. Therefore, some support for the market may be forthcoming at these levels.   
   Nifty Futures - Intra-day Chart



    Nifty Futures  - Daily Chart  

Wednesday, May 18, 2011

Update for 18th May 2011


  The Defensives Stand Tall !


  • In spite of  a shocker by SBI and weakness in pivotals like Reliance, ONGC and the other rate sensitives, the defensive stocks from IT, FMCG and Pharma have stood like a rock preventing severe damage to the market on Tuesday.
  • Therefore, as indicated in the previous post, the fall in Nifty futures has not been very convincing move on the part of the bears.
  • However, some weakness in the so called strong shares may keep the downtrend going further as new downward breaks were seen in some of the big stocks like Reliance, SBI, Tata Steel etc.
  Nifty Futures - Intra-day Chart



    Nifty Futures  - Daily Chart
 

Tuesday, May 17, 2011

Update for 17th May 2011




 Neither the Bulls nor Bears Seem to be Convincing !

  • Nifty futures fell on Monday with a gap from the previous day's close. But the selling did not seem to be convincing as no panic or heavy volumes were seen.
  • Momentum Signal indicated another sell. But this sell signal will be confirmed only if the market breaks the 5440 swing low. 
  • Readers may please note that re-entries to an already established trend can be riskier than a fresh entry in to a developing trend as the latter has more surprise value and is capable of trapping and hurting more traders. 
  • As neither the bull nor bear moves seem to convincing, trading may remain choppy.
  Nifty Futures - Intra-day Chart



    Nifty Futures  - Daily Chart 


Monday, May 16, 2011

Update for 16th May 2011


 Indian Stock Market at Cross roads Again !

  • Though it was indicated that Nifty futures may try to move out of the narrow trading range in the fag end of last week, it seems that no such successful breakout has happened. Nifty futures did indeed tried to move out in both the directions in the last two days of the previous week. However, by the end of the week, it seemed that both the movements have failed. 
  • Now let us check various possible scenarios and it's reasons for the kind of directionless trading being seen the Indian markets.
  • High inflation, rising costs of production, higher interest rates, slowing growth rates and comparatively high valuations have been preventing the markets from achieving new highs. The so called speculative mid caps and small caps have already suffered significant price erosion in the correction from last November onwards. But the blue chips have mostly retained premium valuations so far. Meanwhile, some growth has also helped in moderating the valuation levels. The trailing Price Earnings Ratio ( PE Ratio ) of Nifty index has been hovering between a low of 20 and a high of 25.8 or so for the past one and half years. Meanwhile it is observed that all corrections in the above referred period have bottomed out at near a trailing PER of around 20. ( More information and a long term analysis on Nifty historical valuation are available from the "Nifty Fundas" page ). Now the pertinent question is whether the present correction will also bottom out at near or around the 20 trailing PE mark corresponding to the Nifty levels of 5350 to 5400. However, this will remain as a million Rupee question till the market sorts it out ! 
  • Therefore, the Indian stock markets may not easily achieve any new highs at present and at best remain as a choppy traders market  for some time till the economic outlook becomes better. It may even continue to move down with occasional rallies.  
  • Technically speaking, the medium term trend is still downwards. Markets' inability to bounce back and recover even some of the losses seems to favor the continuation of the downtrend. The rising dollar index may lead to some more risk aversion lead selling by the FIIs in the Indian market. Any raise in the diesel prices may also help the down trend.  
  Nifty Futures - Intra-day Chart


Sunday, May 15, 2011

Update for 13th May 2011



 Blogger Service  Outage Prevented Timely Update



Regular readers of Momentum Signal trading system might have noticed that no post for Friday, ( the 13th of May ) was published. This is the first failure in the past 15 months or so the system has been online that  an update was not published before the end of a trading day. Not only that the already published update for 12th May also vanished without a trace. This author apologizes for the failure. 

Well, all these happened due to something beyond the power of this author. The blogger service was apparently having some technical difficulties for some time in extending a hitherto almost non-stop service, and this blogger faced problems to even log in from last Wednesday night. However, the the update for 12th could be published some how. For the whole of Friday, the blogger service remained read only with no access to the authors and some of the previous posts even vanished. The service was restarted some time on Saturday and the vanished update was also restored by the blogger.  


This author is glad to inform the regular followers the system that a back up service of the trading system is proposed to be provided at the momentumsignal.wordpress.com in case of such rare occurrences.   


The update for last Friday is being published late now in this post but the latest update for Monday, the 16th of May, 2011 follows. 


Thursday, May 12, 2011

Update for 12th May 2011



  Update of Momentum Signal Trading System


Since the blogger is preoccupied and is forced to limit the updates to the basics. Here is the short update of the Nifty futures and options trading system.

  Nifty Futures - Intra-day Chart



   Nifty Futures  - Daily Chart 

Wednesday, May 11, 2011

Update for 11th May 2011



 Update of Momentum Signal Trading System

  • Market seems to have accepted the present price range for the time being. However, traders may expect the market trying to move away from the present range by Thursday or latest by Friday.
  • Here is the short update of the Nifty futures and options trading system.
  Nifty Futures - Intra-day Chart



   Nifty Futures  - Daily Chart 

Tuesday, May 10, 2011

Update for 10th May 2011



 A Late Update of Momentum Signal Trading System


  • As this blogger is attending to some personal matters, this update is also late. Please bear with me for the short update.

 Nifty Futures - Intra-day Chart



   Nifty Futures  - Daily Chart 



   Nifty Options Scene   

The May series Nifty Options Put Call ratio ( PCR May series ) improved slightly to a below normal and bearish looking 0.77 times on Monday. The below normal PCR may indicate the negative bias of the market. 
 
 

Monday, May 9, 2011

Update for 9th May 2011



Another Short Update of Momentum Signal Trading System


  • Market seems to have slowed down it's fall. However, the medium term trend may remain downwards for some more time.
  • The sell signal dated 28th April at a level of 5785 in the Nifty Futures has made a minimum profit of 200 points. 
  • This edition also is limited to basic charts, data and trading system updates.
 Nifty Futures - Intra-day Chart




   Nifty Futures  - Daily Chart 


Friday, May 6, 2011

Update for 6th May 2011



Will the Market Pause Now ?

This update also is limited to the bare minimum due to paucity of time. Regular readers are requested to kindly bear with the author.


   Nifty Futures  - Daily Chart 



   Nifty Options Scene   

The May series Nifty Options Put Call ratio ( PCR May series ) deteriorated to a below normal and bearish looking 0.71 times on Thursday. The deterioration in the PCR may indicate the negative bias of the market. 
 
 
 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 20.32, 3.43 and  1.23 respectively as on  5th May 2011.  ( More information and a long term analysis on Nifty historical valuation are available from the "Nifty Fundas" page ).

Thursday, May 5, 2011

Update for 5th May 2011



   Momentum Signal Trading System Update

  • This update is a very short one due to paucity of time.
    Nifty Futures - Intra-day Chart



   Nifty Futures  - Daily Chart 



   Nifty Options Scene   

The May series Nifty Options Put Call ratio ( PCR May series ) deteriorated to a below normal and bearish looking 0.78 times on Wednesday. The deterioration in the PCR may indicate the negative bias of the market. 

Wednesday, May 4, 2011

Update for 4th May 2011



  Finally RBI Takes ( Late ) Action

  • Nifty future has sold off as envisaged in the Monday's post, following the first firm action taken by the RBI against runaway inflation which has been running high uncontrolled hitherto, as both the central bank and the government were doing only some lip service on the inflation fighting front.
  • If the present downtrend holds, Nifty futures may revisit the 5400 levels in the medium term. However, the contract may get support at the 5450 to 5500 area in the short run.
  • This update is also limited to just the usual trading system data and charts.
    Nifty Futures - Intra-day Chart



   Nifty Futures  - Daily Chart 


Tuesday, May 3, 2011

Update for 3rd May 2011



  Market Awaits the RBI Action for Directions

  • Nifty futures lost some 30 points on Monday but just kept itself above the previous swing low of 5700.
  • The contract has recorded losses for the past six trading days, and therefore, is ripe for a short covering rally.
  • However, any such market action would certainly be dependent on the outcome of RBI interest rate action. If the RBI limits the rate hike to just to 25 basis points ( repo and reverse repo rates ), a relief rally can be expected.
  • Such a relief rally may still encounter resistance at around the Monday's high of 5790. 
  • Monday's trading has not yet significantly changed the technical position of the market. For a detailed analysis of various market scenarios, please read the previous post which described the various market scenarios. 
    Nifty Futures - Intra-day Chart



   Nifty Futures  - Daily Chart 

Sunday, May 1, 2011

Update for 2nd May 2011


 Nifty Futures Critically Poised Again

  • Nifty ended up with losses on all five days of the previous week and finally closed at the lower end of the present trading range. However, trading was still confined to the month old narrow trading range of 5750 to 5950.
  • Some four weeks back we had opined  that some sideways trading  or a consolidation was the preferred short term view. Since then, Nifty futures kept itself mostly inside the narrow trading range.
  • It is still impossible to take a view about the break out direction from the arrow trading  range. Moreover, as the market has made losses in succession for five days some positive closing or short covering may be imminent. As such, traders may look for partial booking of profits or hedging of short positions at the lower end of the narrow trading range at the 5700 - 5750 range. 
   Nifty Futures - Intra-day Chart



   Nifty Futures  - Daily Chart