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

 Another Day of Range Bound  Trading ... !!!

As expected, the Nifty futures opened in the positive territory on Tuesday and started the waiting game for the policy action by the RBI. The market spent most of the waiting period by trading around the last day's closing area. Then came the mild hikes in the interest rates which were  already discounted   by the market.  Barring a mild excursion in to negative territory, the market rallied almost to the previous day's high, once the uncertainty of the RBI action was done away with. However, the markets could not sustain the rally and therefore, it returned to the middle of the new trading range and closed at 5433. 

Nifty Future - Daily Chart 

The daily chart of the Nifty futures has recorded yet another doji candle which may indicate a reversal or range bound trading.  For a change, the BSE Sensex returned a solid white candle  of comparatively small trading range for the day. Tuesday's trading has not changed the technical position of the markets. The Futures and the major indices are still trading above their short term support levels. However, the Momentum Signal indicates that all of them have closed in the neutral territory as on Tuesday.

World Markets

Following the momentum of the strong gains in the past week, the European stock market indices closed in the positive territory on Tuesday. The FTSE, CAC and DAX gained 0.27, 0.83 and 0.21 percents respectively even though closing  prices  were off their intra-day highs. After three days  of more than 100 point gains, the  US DJIA too opened in the positive territory alongwith the other Wall Street indices. However, at 11.00 PM IST, the US stock indices were trading flat to the negative territory. Meanwhile, the US Conference  Board Consumer Confidence index for the month of July  has fallen to the lowest  since last February, amid worries about the lack of jobs.

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as on the close of  27th July 2010, is given below.

 The Momentum Signal returned a +30 value indicating neutral conditions for the 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 28th July, 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 trailing stop for all long positions remains at 5360 which is 2.1 % away from the new high. A close below 5381 on Wednesday will lead to the Momentum Signal indicating a sell with -100 value. However, this signal will be technically confirmed  only when the market  falls below the 5350 levels and trades there for some time with good volumes.

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 !!!

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.

Some Thoughts on Interest Rates

  RBI Willing to Strike, But Afraid to Hurt Again ... !!!

The RBI has once again announced  mild hikes of interest rates at the face of accelerating inflation. The repo and reverse repo rates  were hiked by 0.25 and 0.50 % respectively by the RBI today. The last hike did not lead to any hikes in the rates by the Banks on the ground. Going by the reaction of the markets, Tuesday's action too may become inadequate to tame the inflationary expectations. The RBI still expects the inflation to fall to 6 % levels by the next March. However, it may be remembered that inflation was expected to fall to 5.5% by the last March too. ( It seems that the base effect has not been bailing out the 'expert' predictors ! ) So much for the too accommodating policies of the present managers of economy.

Bye the way, no one needs to be an accomplished economist to understand the situation. Just check up the interest rates of one year bank deposits and compare it with the Government's own inflation figures. You can see that the interest rate is much below the inflation rate and therefore, the depositor actually loses his  purchasing power, by making the deposit. This is called negative interest rate and it kills the savings of the depositors and  robs the poor.   

Now, one may ask who are the beneficiaries of these negative interest rates. Of course the big borrowers including the government are the ultimate beneficiaries of the negative interest rates. Even though a bit of mild inflation is supposed to be good for growth in the economy, run away inflation may lead to bubbles and the subsequent busts as happened in the Nineties. The world has not yet been able to recover from the well known busting of the Greenspan bubbles. Do we need another one of the desi variety ?

 
© 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.