Monday, July 4, 2011

Update for 4th July 2011

  Another Test of 5700 - 5750 Resistance Level !

Due to the fall in the market heavy weight stock Reliance, Nifty futures reversed from the 5700 level on last Friday. Even otherwise, the Nifty contracts were due for some pause or a small correction due to the non-stop nature of the recent rally. As the international markets have rallied further, we may expect a higher open and possibly, another test of the 5700 - 5750 resistance level. Nifty future may face multiple resistance from the 200 day simple moving average ( DMA ) at 5760 and the falling trend line drawn from the last November high. ( Please see the various charts below for details  ).

Nifty Futures - Moving Averages Chart ( DMAs )  

Nifty Futures - Daily Chart

The last week of June saw strong stock rallies all around the world following a fall in the crude oil prices. The U S stock indexes are seemingly placed in a strong uptrend and are poised to test the current year's highs. Following the Greek bailout, Europe too has started to rally. It is pertinent to note that the U S and Indian stock indices were not exactly trading alike for some times, as our indexes were actually undergoing a medium term correction while the former were reaching new highs for the year. Therefore, the question is, irrespective of strong rallies around the world, whether the India rally will peter out at the 5700 - 5750 Nifty levels. As already stated in the previous posts, a strong break above the 5750 level is the basic requirement to prove the end of the medium term down trend. As such, the ensuing week may see a test of the said resistance. A break above the resistance may pave the way for a rally towards the 5900 levels. However,  a failure to cross the resistance may see the Nifty futures contracts trading sideways to correcting to the lower support of 50 and 100 DMAs at the 5525 - 5550 levels.      

S&P CNX Nifty Index - Weekly Chart

Nifty Options Scene   

The July series Nifty Options Put Call ratio ( PCR July series ) closed at a normal 1.28 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 20.75, 3.49 and  1.26 respectively as on 1st 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 has remained in the positive momentum territory ( but area )  with  value of 100 as on Friday. 

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 4th 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.

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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