Market updates for 02/07/2012

Nifty Hourly chart

Finally an expected and long awaited breakout has happened in the market. Nifty has come out of the trading range 5094-5191 and this rally is expected to continue for some more time. The immidiate target is 5300 and Nifty has every potential to reach upto 5400. Ride the tide and don't worry about Why? How? When? because for a trader  WHAT?? is more important.

Many people talk about a theory called filling of the GAP. Whenever market makes a gap or gap down open that gap will be filled within a few trading session thereby trapping the long positions . There are atleast four types of gaps. Today we will look into two types of gaps

 1. Common gap 2.Breakaway gap

Common gaps will happen within a trading range or formation and they are filled in next few trading sessions. But breakaway gaps happen after a long period of consolidation and it is not necessary that this kind of gap should be filled. The gap up open which we witnessed on Friday is a breakaway gap and for the time being let us not think about filling the gap.

Nifty Daily Chart

Nifty has closed above 100 DMA at 5200 which is a bullish sign.50% retracement of the fall from 5624 levels is at 5297 and once Nifty sustains above that level next target will be 5440.

Nifty Monthly Chart

Traders should be very careful at 5400  because there are multiple resistance at this level. As soon as Nifty reaches around 5400 (Not exactly 5400). Exit a major part of holdings and sit with cash to encash the opportunities.

Top Pick of the week

IDFC : Buy around Rs.136-140 for a target of Rs.150-160. Reversal is closing below Rs.130 Time frame could be one month. Untill it is above Rs.130 bulls have upper hand.

Trade as per risk tolerence but not as per expectations.

Open Positions

Scrip	Type	Qty	Price	CMP	P/L
Yes Bank	Long	65	340.5	339	-97.5
Tata Mot	Long	100	245.5	242.5	-300
Hero Motoco	Long	65	2127	2150	1495

Today's Trade

Scrip	Qty	Buy Price	Sell Price	P/L
Hero Motoco	65	2127

Nifty Medium Term View

Trend	Up
Initiation Date	12/06/2012
Initiated at	5116
High since change	5280
Reversal if closes below	5020

One of the traderswas complaining that I am defensive and I need to be aggressive to earn more money in market. I am defensive and I will be defensive for ever. I give highest importance for protecting the capital because money doesnt come for free. If you have capital you will earn profit. You will get nothing out of nothing.

I am not an aggressive day trader and I prefer swing trading (2-3 days) and trend trading (more than a week). I also don't try to double money overnight and my basic objective is to earn smaller but consistentprofit. Because I consider trading as a business but not as a casino. What about you??

Thought for the day

Buy that which is showing strength – sell that which is showing weakness. The public continues to buy when prices have fallen. The professional buys because prices have rallied. This difference may not sound logical, but buying strength works. The rule of survival is not to “buy low, sell high”, but to “buy higher and sell higher”. Furthermore, when comparing various stocks within a group, buy only the strongest and sell the weakest.