Update on The Ultimate Momentum Signal - 7th May, 2010

 The Judgment Day Is Here... ! 

( Ambani Vs Ambani )

The Final judgment on the RIL- RNRL gas dispute is expected to be pronounced by the Supreme Court on Friday, the 7th of May, 2010. All traders may remember that the Mumbai High Court had favored the Anil Ambani managed RNRL earlier. In expectation of an adverse judgment, the Reliance stock has not been  performing for some time and is presently in the correction mode. As the Reliance stock has the maximum weight in the Nifty index, it has the power to move the market single - handedly.  A five percent move in either way may be expected in the Reliance stock in accordance with the judgment. The RNRL stock may see volatility which may be as high as 20 to 40 %. Other Anil Ambani group stocks like  RPOWER and RELINFRA may also see higher volatility.

Reliance - Daily Price & Moving Averages Chart

Depending on the judgment, the Relaince stock may reach 950 - 960 range on the lower side and 1050 - 1060 range on the upper side. The previous low of Reliance is at 960. The 50 and 100 DMAs of the stock are placed at 1052 - 1053 levels.  The 20 DMA is at 1064. 

Daily Update on The Signal

The Nifty futures opened with negative bias on Thursday and traded lower to reach a new low of 5025 when the European markets opened with significant losses. However, the futures recovered and tested the then day's high. It recorded a new high for the day at  5114 and finally closed at 5094. Friday's trading will be based on the outcome of the Reliance verdict and the cues offered by the international markets. A verdict in favor of the Reliance may infuse a short covering rally in the Nifty Futures too. Another sell off in Reliance stock and the Nifty futures may see that the  Nifty futures touching the 200 DMA at 4950. The trailing stops are at 5130 and 5150 levels at present. Please see the chart below and the previous post for more information. 

Nifty Futures - Daily Chart     

World Markets

The European markets closed with significant losses of 1.5 to 2.5 % on Thursday. The international investors were slightly disappointed with the statement by the European Central Bank. The statement had no policy initiatives to tackle the sovereign debt problem. The Euro has weakened significantly against the USD.  US markets were trading with losses of 1 to 1.5 %  at the time of writing this post.

The  US S&P 500 index was trading at the January, 2010 high of 1150 at 10.45 PM IST.

The Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  6th May 2010, is given below.

The Momentum Signal has closed in the sell territory for the seventh day. 

Projected Momentum Signal Close Values

The projected levels of closing values corresponding to the momentum shift / neutrality / continuation as on the close of trading on 7th May, 2010 are given in the table below. The table also include the projected closing values of BSE Sensex corresponding to the momentum shift / neutrality / continuation signals.

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

The closing values for the continuation of the downtrend have decreased for the -50 signal whereas the closing values required for the -100 signal has  increased. The values required for the resumption of an uptrend is far away at present.

Traders may expect a highly volatile day of trading on Friday. Having no positions just before the delivery of market moving news items is also a good policy which  reduces undue risk to the trading capital. 

Please do write in your suggestions and comments about this blog.

Cheers and Prosperous Investing and Trading!!!   

You can use the free online Position Limit Calculator from here.

You can also checkout the five year history of The Momentum Signal Spreadsheet from 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 - 6th May, 2010

 The Sell Signal Delivers More, But Now What ... ?

Following the negative cues from the world markets, the Nifty futures opened around 60 points lower at 5071 on Wednesday. The markets traded sideways  for most of the trading day barring the last hour. It recovered in the final hour of trading to reach the last traded value of Tuesday  and closed at  5130 with no losses.  Even though, the futures traded below the 100 day moving average placed at 5120 for most of the trading day, it closed above the average. The other major moving averages, 50 DMA and the 200 DMA are at 5190 and 4944 respectively. In case of further advance by the futures, it may encounter resistance at the 50 DMA at 5190. The 50 DMA also coincides with the trailing stop of 2.5 % from the present low.

As the present downtrend in the Indian market is partly induced by the developments in the international markets, all traders need to be extra careful as some of the problems faced by the European debtor countries have  no precedents and therefore the consequences are also unknown. Moreover, some volatility in the whole markets may be expected in association with the  delivery of the judgment in the  RIL- RNRL gas case.   

Nifty Futures - Daily Chart      

The Momentum Signal system recommends stops at 2.1 to 2.5 % in accordance with the volatility of the futures. As the volatility of the futures has increased the trailing stop may need to be increased to 2.5 %. The trailing stops under both the percentages, i.e. 2.1 and 2.5 % are at 5160 and 5190 respectively. Please also see the chart above marking the stops and the one below which shows the different moving averages of the True Range in points.

  Nifty Futures - Daily ATR Chart   

World Markets

The European markets closed with losses of around a percentage each while the Euro lost new ground against the USD. Commodities also lost because of the strength in the USD and  fears over the weakening ( ? ) fundamentals. Even though  the US markets opened with deep losses, some of the losses were recouped by 11 PM IST, and the markets were trading with small losses at around the lows of Tuesday.

 

The Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  5th May 2010, is given below.

The Momentum Signal has closed in the sell territory for the sixth day. 

Projected Momentum Signal Close Values

The projected levels of closing values corresponding to the momentum shift / neutrality / continuation as on the close of trading on 6th May, 2010 are given in the table below. The table also include the projected closing values of BSE Sensex corresponding to the momentum shift / neutrality / continuation signals.

 

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

The closing values for the continuation of the downtrend have increased for the -50 signal whereas the closing values required for the -100 signal decreased. The values required for the resumption of an uptrend is far away at present.

 

As the Momentum Signal trading system just tries to follow the trends and not to find targets,  the trader  just needs to place the recommended trailing stops. If the trend lasts some more, let the system ride the trend. Even if the stop is hit, some profits are  left.

Please do write in your suggestions and comments about this blog.

Cheers and Prosperous Investing and Trading!!!  

You can use the free online Position Limit Calculator from here.

You can also checkout the five year history of The Momentum Signal Spreadsheet from 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.