The Ultimate Momentum Signal

Tuesday, June 8, 2010

Update on The Ultimate Momentum Signal - 8th June, 2010

The US Markets Still Hold the Key... !

Nifty Futures opened near it's 200 DMA support at 5010 and traded within a twenty point band on both the sides of the support on Monday. However, it closed above the 200 DMA at 5029. Indian market has just reacted to the Friday's Wall Street sell off and is waiting for further directional cues from the international markets. As the US market may take one or two days to find it's immediate direction, the next direction of the Nifty futures too remains unpredictable. If the US markets were to find support at the current lows and hold it, Nifty may try to test the next resistances. Traders may watch for the breach of both the low and high of the Monday's trading range for further directional indications. As some of these breakouts may fail too, they may also watch out for such failures too.

Nifty Futures - Daily Chart

The above chart shows the updated DMAs of the Nifty futures as on date.

World Markets

The European markets closed with losses on Monday. The FTSE, CAC and the DAX closed with losses of 1.11, 1.21 and 0.57 percents. The US indices were mostly trading with neutral to downward bias on Monday. At the time of this post the US indices were trading with losses of a quarter to nine tenth percents.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of 7th June 2010, is given below.

The Momentum Signal has returned a neutral value of +20 as on Monday, the 7th June, 2010.

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 8th June, 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.

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

The minimum closing values required for a +50 positive momentum has decreased and are below the trading range of Monday. However, the values required for a +100 value, indicating maximum momentum in accordance with the system, are above the Monday's trading range. Values required for a sell signal are still far off.

Since the markets are still trading all over the place on the basis of day to day international cues, any predictive system will be susceptible to many whipsaws in such environments. Hence, the Momentum Signal System will also be suffering from whipsaw signals at present. Trading light to reduce the risk of loss is the best option at present.

Cheers and Prosperous Investing and Trading !!!

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Sunday, June 6, 2010

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

The US Market Suffers Heavy Losses ... !

The US Markets Intra-day Chart

After the release of lower than expected jobs data, the US markets sold off steeply and closed with losses of three percent on last Friday. The US indices closed at four month lows. The European markets too participated in the early part of the Friday's US led sell off.
The Euro currency too hit a new four year low on last Friday. Hungary too disclosed a higher than expected fiscal gap raising the fears of sovereign debt crisis again.
Asian markets are expected to react to the Friday's mayhem when markets open on Monday.

Picture Source : Google Finance

Indian Markets

Indian markets are set for a gap down opening on Monday. The million dollar question is what the market will do after the gap down opening. Previous experience shows that a market in a strong uptrend suffers such a jolt, it tries to regain the losses and the rally mostly resumes. Even though the Indian markets were on an uptrend when trading closed last Friday, it can not be treated as a strong uptrend. The uptrend was visible only in the daily charts and the weekly charts are some what neutral. Therefore, the answer to our question is still held by the international markets. If the US markets were to sustain above the Friday lows and gain from there, Indian markets may recover. And if some more negative cues come from either Europe or the US, the present recovery may end.

Nifty Futures - Daily Chart

The falling trend line of the regression channel and the 200 DMA at 5009 may provide some support to the market.

The Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of 4th June 2010, is given below.

The Momentum Signal returned a value of +100 last Friday.

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 June, 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.