Update for 2nd August 2011

Same Old Story Continues !  

I had indicated in the yesterday's post that failure to clear the 5550 -5560 level may see the Nifty futures testing the lows. It was also said that in the absence of any triggers, some back and forth trading may be expected. The kind of trading seen today morning also proves that this scenario is playing out so far. The reasons for this kind of trading are the following. ( a ) The medium term trend is still neutral to down due to the rising interest rates and inflation and the consequent slowing growth and profitability, ( b ) In spite of the aforesaid reasons warranting lower stock prices, the best of Indian stocks are still retaining somewhat premium valuations on the expectations of long term growth while most other stocks are still on a correction path, and ( c ) These diametrically opposite factors have lead to the sideways kind of trading and a breakout in either direction is beyond anybody's call right now.  

Nifty Futures Daily Chart 

Update for 1st August 2011

Back in the Old Trading Range ?  

As indicated in the previous post that a short reversal might be in the making, Nifty future is testing the 5550 level today morning. Failure to clear the 5550 - 5560 level may still lead to a test of the lows. However, closes between the 50 DMA ( 5525 ) and the 100 DMA ( 5590 ) will indicate continuation of the trading range. As the Nifty futures are placed between important trend lines and various Moving Averages, some kind of two way trading will continue in the absence of  any triggers. Therefore, all trend following systems, including the Momentum Signal will continue to whipsaw.

Nifty Futures - Moving Averages Chart

Nifty Futures Daily Chart