Update on The Ultimate Momentum Signal - 21st Sept. 2010

  Another Super Duper Monday ... !!!

The Nifty futures closed at the day's highs on last Friday indicating the buying pressure. And some follow up buying was also expected on Monday. As expected, the Futures opened higher and almost immediately set out for a test of the 5960 target already pointed out on this blog in the posts dated 16th and 20th September. Normally, some profit booking can be expected at such widely known targets. The Nifty futures corrected only 20 points from the said target of 5960 and again tried to test the highs. In this process of  the second test of the 5960 area, the correction from the target was limited only to just the half the points of the first.  As already explained on this blog that the third test of any support or resistance has more of a chance to effect a breakout, the third test of the target of the 5960 area resulted in an intraday breakout. And once again the bears were trapped.  It is better to remain  long instead of trying to find targets as strong bull markets have no resistances. The next minor resistances are at 6050 and 6200 before the resistance offered by the all time high at 6330.    

 Nifty Futures - Daily Chart     

 

The ferocious nature of the almost vertical rally indicates that the Nifty future is poised to test the all time highs once again. However, as the markets may not directly reach the said target and some shake out of the new bulls may happen, traders may not act on this opinion under any circumstances by making fresh long positions in the market just on the basis of this opinion. Let's see what the market does on a day to day basis and come to the conclusions on the basis of the latest happenings. 

Meanwhile the historical price earning ( PE Ratio ), price to book value ( PB Ratio ) and dividend yield ( DY Ratio ) of the Nifty Index reached 25.25, 3.93 and 1.01 as on 20th Septeber 2010. The following is a snapshot of the Nifty historical fundamental as seen from the NSE, India website.

Nifty Index - PE, PB and DY Ratios

 

 Source : NSE, India 

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  20th  September, 2010 is given below :

Nifty futures and the tracked indices have closed with the maximum upward Momentum Signal values of +100 for the tenth  consecutive trading 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   21st 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 above table also indicates the extra ordinary strength of the bull rally because, even after a passage of ten days after the buy signal, the exit signal are still placed far lower than the current market levels. 

However, The trading stop for long positions under the Ultimate Momentum Signal system  stands raised to    5879 ( i.e. 6006 minus 2.1 % of 6006 ). Traders may raise the trading stop to 97.9 % of the new high, as and when the market makes such new highs.

 

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 - 20th Sept. 2010

   A New Week and a New High Too ... ?  

Nifty futures made a phenomenal rally last week on the back of the relentless buying by  FIIs. The market close was near the highs too. Now the question is whether the market will be able to sustain the last week's run rate in this week too. Even though the Ultimate Momentum Signal system do not involve any forecasting or prediction of targets and it just keeps the positions as such until exited by the application of system rules, let's revisit the post dated 16th September in which  the immediate  target  was arrived at. According to the good old simple gap theory of the technical analysis, the target remains at the 4950 to 4960 area.  And the market may reach the said target in the early part of the new week. However, traders may consider two factors after a week of relentless rally. The first is that the rally may decelerate as no markets can continue in a single direction without any breathers. And the second is that the markets have no big resistances above and the only major resistance is at the previous all time high. Therefore, the rally may become a bit more broad based while the front runners ( the major Nifty companies ) take a breather. The symptoms of the rally becoming much more broad based ( rally spreading to the midcaps ) was seen on last Friday as seen in the improvement in the advance declines ratio.

 Nifty Futures - Daily Chart    

The immediate target of 4950 to 4960 area is shown in the daily chart of the Nifty futures above. However, a comparison of the present valuation of the Indian market  to the historical valuation levels obtained in the two previous boom bust sequences, indicates that the markets have become quite expensive right now. ( For more information on historical fundamantal analysis of the Nifty index please read ' Nifty Fundas ' page from here.) The ultra cheap money policies of the recession hit countries  and the resultant excess liquidity is the only real reason behind the FIIs buying. Another saving grace which favors the rally can be the still ongoing monsoons. The Indian institutions are rather on a profit booking mode than participating in the rally by any  aggressive buying. The present day valuations can be justified only by a corporate profit growth at least 25 % for the FY 2011. As the first quarter results were rather lukewarm, corporate India has to do some unprecedented kind of profit growth in the remaining months of the year to reach such ideal growth rates.  Therefore,  any reversal in the foreign fund flows may result in a bout of panic selling  and a correction.  The price earning ( PE Ratio ), price to book value ( PB Ratio ) and dividend yield ( DY Ratio ) of the Nifty Index as seen from the NSE, India website is shown below. 

    Source : NSE, India

  

Updated Momentum Signal Spreadsheet

The updated spreadsheet showing the Momentum Signal as at the close of the trading on  17th  September, 2010 is given below : 

 

 

Nifty futures and the tracked indices have closed with the maximum upward Momentum Signal values of +100 for the ninth 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   20th 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  remains  at  5791 ( i.e. 5916 minus 2.1 % of 5916 ). Traders may raise the trading stop to 97.9 % of the new high, as and when the market makes such new highs.

 

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.