Update on The Ultimate Momentum Signal - 28th June, 2010

    Make or Break Week Ahead ... !

Last week, the Nifty futures opened at 5325 with a positive gap and achieved a high of 5377.55. However, the futures reversed from the resistance band of 5360 - 5400 and closed even lower than the open at 5286.  The weekly chart of the S&P Nifty index shows a shooting star doji candle indicating further weakness. The European markets were in clearly in a short term downtrend as the indices have lost continuously for the last four trading days. The weekly charts of US market indices  have also shown bearish engulfing candles in the last week.

S&P Nifty  Index - Weekly Chart

As is seen in the above weekly chart, Nifty index has been trading in an ascending channel for almost ten months now. In case of a small correction the index may be supported by the confluence of weekly moving averages at around the 4150 levels.

Nifty Futures -  Daily Chart 

The stop loss for the existing long positions remains at 5265 ( i.e. High 5377.50 - 2.1 % of High ). As per the  Momentum Signal model, the futures has not yet lost it's positive momentum. However, Monday's trading may decide the fate of the present uptrend.  

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  25th June 2010, is given below.

 

 

The Momentum Signal has closed in the marginally positive territory  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 28th 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 closing values required for a sell signal have increased and are even higher than the last Friday's close. However, if the markets recover and close higher than the last Friday's high, the positive momentum may continue.The probability of the system indicating a sell signal have gone up considerably. World markets have shown more weakness than the Indian markets in the past week. Traders may checkout the world markets for a reaction  to the ongoing G 20 meet and take cues for the market direction. 

Cheers and Prosperous Investing and Trading !!!  

 

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© 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.

Nifty Heavies Revisited .. !

  A Followup on Nifty Heavy Weight Stocks ... !

In the last edition of the Nifty Heavy Weights - "Which Nifty Heavy Weight Stocks to Buy .. ?", it was recommended that  ITC is the best buy among the top ten Nifty constituents.  It was also recommended that the stocks of  SBI, LT, HDFCBANK, INFOSYS, HDFC and ONGC are also having good positive momentum warranting long positions. As expected these stocks have out performed.   Now let's have a follow up of the Nifty and it's heavy weights.

Nifty and It's Heavy Weights

The top ten members of the S&P Nifty index, their weights, rank, closing prices and various daily moving averages are given in the table below. The corresponding close and the moving averages of the S&P Nifty index is also given in the table.

ITC remains the best performer in the pack and is quoting 17 % above it's 200 day moving average (  DMA ). Infosys, HDFC, HDFC Bank and ONGC too are quoting above their respective 200 DMAs by about 10 %. ICICI Bank is the worst performer and is quoting below it's DMAs. The Nifty index is quoting above it's 200 DMA by 4.17 %. Reliance continues to trade in the trading  range between 1000 and 1100 and is quoting very near to all it's DMAs.

S&P Nifty Index - Daily Chart

The Nifty index reached it's post bear market high in the first week of April, 2010. To make the visual analysis of the charts, regression channels are drawn in the above and all the following charts to show the general direction of trade since April high. As you can see from the chart above, the regression channel of the Nifty index is still moving slightly downward.

Reliance  

Even after the favourable settlement of the gas dispute with the ADAG group and the freeing of petrol prices and a promise to free diesel prices, the Reliance stock is still trading sideways. The present trading range seems to be 1000 to 1100. The stock has been trading in a slightly wider range for almost an year. 

Infosys

Even though the stock has not reached a new post April high, it remains as one of the out-performers. Also it remains as one of the least interest sensitive stocks along with ITC in the top ten Nifty Heavy weights.

ICICI Bank    

ICICI Bank is worst performer in the top ten list. It is trading in a downward slanting regression channel. This stock is showing more weakness in comparison to the other three interest sensitive financials in the top ten list viz. HDFC, HDFC Bank and SBI. Any further weakness in the general market may see the stock revisiting the 800 - 820 range.

LT   

LT joined the performers since the last quarter's results but may be affected in a rising interest rate regime. However, as of now, this stock has good momentum and may get support at 1680 to 1700 levels.

ITC

ITC still remains the best performer and it may be accumulated on any weakness at the 275 - 285 range. This is also the least interest rate sensitive stock of the top ten list. A normal monsoon as per the latest prediction of the IMD, will add further growth impetus to the stock.

HDFC

Even thorough HDFC stock may be interest sensitive, this is one of the rarest of blue chips which performs steadily  in all kinds of interest rate regimes. This stock also remains a favourite  of the  institutional investors and may be accumulated. This stock remains a buy around the 2700 levels.

HDFC Bank

Even though HDFC Bank is trading in a flat trajectory according to the regression channel study, it remains the best bank among the top ten list. This stock can also be accumulated at lower ranges of the regression channel if available.

SBI

Even though SBI has recently been an out performer with an upward slanting regression channel, the fact remains that it is an interest sensitive stock. The stock has been performing well recently, may be, because of it's sovereign backing and the receding fears of another dip in the economic cycle. 

ONGC 

Liberalisation in the pricing of petroleum prices and consequent reduction in the subsidy burden has made this stock an out performer. This stock may accumulated at around the 1200 levels.

BHEL

BHEL has re-entered the top ten heavy weights list and TCS has gone out. This blue chip is an interest sensitive to some extent and is still trading in the downward slanting regression channel.

Conclusion

As in the previous edition, ITC remains the numero uno stock of the top ten Nifty heavy weights for investment. ONGC, Infosys, HDFC and HDFC Bank too joins the list of best stocks for investment. LT may also be counted for investment at lower levels. Therefore the best performers list remains the more or less the same with the exclusion SBI. This recommendation is issued on the back of expecting interest rate tightening by the RBI in the ensuing months. 

The above conclusion and the recommendation are on the basis of recent momentum and are subject to changes from time to time. All usual disclaimers like 'past performance may not be sustainable in the future' etc are applicable too.

Cheers and Prosperous Investing !!!

© 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.