Update on The Ultimate Momentum Signal - 17th Sept. 2010

  

   Finally,  Bulls Take a Breather ... !!!  

Nifty futures opened at 5842, slightly lower than the previous day's last traded price, on Thursday. As is common in strong bull markets, market immediately tried to test the previous day's high. It reached the previous day's high of 5875 and then started the sideways to negative trading before the monetary policy announcement by the RBI. 

The RBI announced 25 and 50 basis point ( 100 basis points = 1 % ) hikes in the repo and reverse repo rates. ( Repo is the process through which  RBI lends to the banks against collateral of government securities in the very short term and Reverse repo is the process through which banks can keep excess liquidity with the RBI  in the very short term. ) The hike of 50 basis points in the reverse repo seemed to be beyond the consensus estimate. The overall market reaction to the hike seems to indicate that the RBI is still behind the curve in raising the interest rates to control inflation.

Just after the policy announcement, the market recorded the then day's low. However, instead of  making any further losses, the market enacted another strong rally above the then high and recorded a new high of 5916 and 5902 in the futures and the index respectively. Even though Thursday was not expected to be a positive day for the markets because of the continuous positive closes  for so any days, anyone who have sold in the morning session in expectation of the consolidation would have made losses by the triggering of the stop losses above 5875. This particular matter is brought to the attention of the readers just to express the due weightage to be given to aligning of the positions to the dominant trend of the market in trading.  Well, the dominant trend is up and it is better to play the long side, provided the entries at suitable places. 

   Nifty Futures - Daily Chart    

 

Some more consolidation and profit booking can be expected before the markets making the next major move. In case of a consolidation or small correction, the highs, lows, last traded prices etc of the previous three day's bars can be used as reference points by the intra day traders.  

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  16th  September, 2010 is given below : 

 

 

 

 

Nifty futures and the tracked indices have closed with the maximum upward Momentum Signal values of +100 for the eighth consecutive day.

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  17th September, 2010, are given in the following table.

 

 

 Please click on the table to enlarge. For more info on the above table,  please click here.  

 

The trading stop for long positions under the Ultimate Momentum Signal system  stands raised to  5791 ( i.e. 5916 minus 2.1 % of 5916 ). 

 

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here

 

 

© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.

Update on The Ultimate Momentum Signal - 16th Sept. 2010

   Bull juggernaut yet to take a breather ... !!!  

The bull juggernaut, the possibility of which was envisaged by this blog as a mad scramble to get in to stocks  if Nifty breaks above the eleven month old trading channel or another bout of irrational exuberance ( please see the posts dated 23rd Aug. and 9th Sept. 2010 ),  continued on Wednesday too. The Nifty futures opened near Tuesday's last traded price and immediately tried to test the previous day's highs. It reached the high of 5875 before noon and traded in a narrow range to close at 5861.50 for the day.  The Nifty futures have recorded gains in seven consecutive days. This raises the chances of a deceleration in the gains  or a consolidation for one or two days. However, the markets may still continue to gain after the consolidation because of the very strong momentum seen in the charts.

   Nifty Futures - Daily Chart     

Now let's try to calculate an immediate  target to the current rally.  According to the traditional gap theory in technical analysis, the range of the market above a gap may equal to the range below. Hence the next target for Nifty futures may be calculated as 5960. This target is calculated by adding the range below ( 5640 - 5350 = 290 points ) to the lower end of the gap at 5670. However, this is subject to  the condition that the rally continues without the gap being filled. And the formation of the gap itself is questionable because of the fact that the editing done to the above chart to screen out a freak trade which occurred on the day before the gap. Traders may not give much importance to this target, but to the method of the analysis in the traditional technical studies. In the Japanese candlestick charting method, gaps are called windows and both  the ends of  a gap ( 5640 and 5670 ) are considered as supports or/and resistances as the case may be.  As a final word on gaps, it is also said in technical analysis that,  ultimately, all gaps gets filled more or less.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  15th  September, 2010 is given below : 

Nifty futures and the tracked indices have closed with the maximum upward Momentum Signal values of +100 for the seventh consecutive day.

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  16th September, 2010, are given in the following table.

 Please click on the table to enlarge. For more info on the above table,  please click here.  

The trading stop for long positions under the Ultimate Momentum Signal system  stands raised to   5751 ( i.e. 5875 minus 2.1 % of 5875 ). 

 

Cheers and Prosperous Investing and Trading !!!

To access and/or download  the free online Position Limit Calculator click here.

To checkout the five year history of The Momentum Signal Spreadsheet click here

© 2010, momentumsignal.blogspot.com All rights reserved.

Disclaimer: No research, information or content contained herein or in the accompanied spreadsheet shall be construed as advice and is offered for information purposes only. We shall not be responsible and disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered by the user or any third party as a result of or which may be attributable, directly or indirectly, to the use of or reliance on any information or service provided. All files/information is provided 'as is' with no warranty or guarantee as to its reliability or accuracy.