Nifty Futures - Discount Turns in to a Premium ... !!!
The Nifty futures opened at 5470 and reached a high of 5483 in the first half of trading on Thursday. As it found difficult to trade higher, it just hovered above the previous close and sold off in the last hour of trading. It closed at 5455 for the day. Meanwhile, the futures have returned to premium in comparison with the underlying index. Thursday's trading has not changed the technical position of the market. As the market is not changing significantly on a day to day basis and the trading is confined to a trading range, this blog is forced repeat whatever has already been written again and again. ( It is becoming almost an occupational hazard ! ).
Even at cost of repetition, this blog is forced to write that the present day trading doesn't inspire enough confidence in the rally, even though nobody can call a top and the grinding rally may continue. Historically, Indian and other markets have extended their rallies to irrational and unsustainable levels, only to fall to irrational bottoms. One of the best examples of an unnecessarily extended rally happened in the last quarter of the year 2007. Disposal of low quality stocks, if any, from the holdings seems to the best course of action at present. However, this do not amount to the initiation of any short positions unless triggered by fundamental or technical considerations. ( Click here to read an article on Nifty fundamental valuation and inflation. )
Nifty Futures - Daily Chart
Updated Momentum Signal Spreadsheet
The updated spreadsheet showing the Momentum Signal as at the close of the trading on 5th August, 2010 is given below :
The Momentum Signal has remained in the buy territory as on Thursday.
Projected Momentum Signal Close Values
The projected levels Momentum Signal values applicable to various ranges of closing values of the Nifty Futures, Nifty Index and the BSE Sensex, as at the close of next trading day, ie. as on 6th August, 2010, are given in the following table.
Please click on the table to enlarge. For more info on the above table, please click here.
"Readers of this blog may please note the following 'Risk Factor' which is being repeated almost daily these days. The markets are trading in small ranges at the top end of a slow climb and for all practical purposes the trading is range bound. Range bound markets are not suitable for the profitable trading of the Momentum Signal system."
"As the Momentum Signal is primarily a trend following system, it may indicate whipsaw signals in range bound markets. As such, all readers of this blog are requested to read the various pages describing the system and understand all the intricacies of trading the Momentum Signal and it's risk factors too. Please do write in your comments and suggestions."
Cheers and Prosperous Investing and Trading !!!
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