Sunday, July 10, 2011

Update for 11th July 2011

     A Short Term Reversal in the Making ?

After the last Thursday's phenomenal rally,  Nifty futures opened almost exactly at the 200 day moving average ( 200 DMA ) and thereafter started to slip slowly on Friday. The slow drift accelerated in the afternoon session in to a mini sell off. Nifty futures and the underlying index closed almost at the day's lows. Friday's fall has not only reversed most of the gains achieved on Thursday but also has lead to the formation of a Dark Cloud Cover model pattern in the daily chart. This pattern can be associated with short term reversals, especially, if the open is near or above a resistance. As the open was at the significant resistance of 200 DMA and the falling trend line, this pattern can be indicating a a real short term reversal or at the least, some sideways trading.

Nifty Futures - 5 Minute Intraday  Chart


Nifty Futures - Daily Chart    

S&P CNX Nifty Index - Weekly Chart 

The weekly chart too shows the tentative reversal from the middle of the old trading channel where the resistance from the falling trend line and the 45 week moving average are currently situated. In case the correction continues further, the next lower support is at the 5500 - 5550 band. However, as of now, it is not yet feasible to guess whether the reversal pattern seen in the chart will lead to a short term correction or to some sideways trading. If the latter scenario plays out, another test of the resistance is also feasible. A break above the major resistance area of 5700 - 5760 may see a rally to the 5900 area whereas an opposite move can see the Nifty futures revisiting the lower support line of the old trading channel at around the 5400 - 5450 levels.

Nifty Options Scene   

The July series Nifty Options Put Call ratio ( PCR July series ) closed lower at a normal 1.26 times on last 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 20.87, 3.51 and 1.25 respectively as on 87th July 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 in respect of the Nifty futures contracts closed lower at +80 whereas the Signal values of the indices remained at +100 as on 8th July, 2011. 

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 next close, ie. as on 11th July, 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.

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Cheers and Prosperous Investing and Trading !!!

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