Market update for 27/06/2012

Nifty Hourly Chart

Another day of consolidation. Nifty has closed at 5120 up by insignificant 6 points. We are still in a narrow trading range of 100 points that is between 5063-5191. Since today the closing has happened near lower part of the range we need to see whether market crawls up to 5143-5191 or breaks 5093.

If breakout happens then there is every possibility that we can expect a 100 points movement in Nifty. So the target should be either 5300 or 5000. Now the trading strategy should be buying above 5200 or selling below 5090. Traders are requested to wait for sustainable breakout .

Nifty Daily Chart

There is no significant changes in Daily chart. Nifty is trading between 200 and 100 DMA which are at 5200 and 5075 respectively. Major reversal can happen only below the descending trend line. The trend line which was acting as resistance can also act as support. So major reversal can be expected only if Nifty closes below the trend line. Closing below the trend line for a day or two can take Nifty to 4800 again. Note that this is only an observation and breach of the trend line can take more time.

Chart of the day

 

SBI hourly chart

SBI has been one of the outperformer in the recent rally. It is leading the  rally in Nifty as well as in Bank Nifty. It is a buy on dips stock and since it has reached  important trend line support it can be bought. The risk involved is very limited. Buy SBI around 2100 for a target of 2130-2160 and above  stoploss is below 2080.

Open Positions

Scrip	Type	Qty	Price	CMP	P/L
Yes Bank	Long	65	340.5	341.4	58.5
Tata Mot	Long	100	245.5	246.2	-70
Nifty 5100 PE	Long	100	33	35	200
Bank Nifty fut	Long	25	9975	10002	675
Bank Nifty 9900 Put	Long	25	260	265	125

Today's Trades 

Scrip	Qty	Buy Price	Sell Price	P/L
Bank Nifty fut	25	9975
Bank Nifty 9900 Put	25	260

Nifty Medium Term View

Trend	Up
Initiation Date	12/06/2012
Initiated at	5116
High since change	5191
Reversal if closes below	4920

Thought for the day

Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it - even though others may hesitate or differ. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right. - Banjamin Graham

Market update for 26/06/2012

 

Nifty Hourly Chart

Today Nifty ended with moderate decline. Auto, Banks and metals were major losers. Nifty closed at 5114 down by 31 points.

As expected Nifty tested 5191 again but it is unable to break 5191. Profit booking might have started at these levels as Nifty has rallied from the level of 4800. In the earlier trading session Nifty has tested 5094 twice and bounced back. In the earlier post I had mentioned that 5094 is the important short term support. If  short term dip continues 5094 can act as important support and if Nifty breaks that level then target will be 5050-5000. Now the trading range is 5094 to 5191 . Wait for the breakout to happen before taking positions. Sometimes the best thing to do in market is to sit with cash and wait for opportunity.

Nifty Daily Chart

Nifty is facing multiple resistance around 5200 levels. 5200 is the 50% retracement of fall from 5623 also 100 DMA is located near 5200. RSI is in overbought range. So unless Nifty closes above 5200 we cannot expect further upside. As per daily chart short term reversal is closing below 5075 target 5000 and below.

Chart of the day

INR/USD

Rupee has continued to depriciate against USD. This depriciation is expected to continue further and the target is 58. Short term reversal can happen if INR closes below 56. Major reversal of the trend can happen only below 54.50.

Open Positions

Scrip	Type	Qty	Price	CMP	P/L
Yes Bank	Long	65	340.5	339.1	-91
Tata Mot	Long	100	245.5	246.2	-70
Nifty 5100 PE	Long	100	33	35	200

Today's Trade

Scrip	Qty	Buy Price	Sell Price	P/L
Hero Motoco	15	2050	2107	855
Yes Bank	65	340.5	349	552
Bank Nifty Fut	25	10010	10160	3750

 

Nifty Medium Term View

Trend	Up
Initiation Date	12/06/2012
Initiated at	5116
High since change	5191
Reversal if closes below	4880

Thought for the day

"I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over." - Warren Buffett

Market update for 25/06/2012

Nifty Hourly Chart

On Friday's trading session market made a gap down open because of the negetive global cues. But managed to bounce back from the day's low of 5094. Traders should observe that Nifty is forming a new trading range. Earlier support was at 5047 and now the support is shifted to 5094. If Nifty sustains below 5094 then only we may see a short term dip in the market otherwise market will move towards 5200-5300.

On Monday if Nifty sustains above 5168 then it can reach 5192. On the other hand if it sustains below  5094 then 5070 and below can be achieved.

Nifty Weekly Chart

In weekly chart the uptrend of Nifty is still intact. The breakout from the descending trend line is very well protected and as per Fibonacci levels Nifty is likely to reach 5200 and then 5300 which are 50% and 61.8% retracement of the total fall from 5623. Traders can start partial profit booking from 5200 till 5300.

Top pick of the week

LT

LT is rallying continuously from the bottom of Rs.1105 and it is still likely to continue its uptrend. Short term traders can buy LT around Rs.1370 for a target of Rs.1415 - 1450 and above  stop loss should be weekly close below Rs.1310.

Open Positions

Scrip	Type	Qty	Price	CMP	P/L
Yes Bank	Long	130	340.5	340.25	255
Hero Motoco	Long	15	2050	2086	720
Tata Mot	Long	100	245.5	248.3	270
Bank Nifty Fut	Long	25	10010	10038	700
Nifty 5100 PE	Long	100	33	21	-1100

Today's Trades

Scrip	Qty	Buy Price	Sell Price	P/L
Havells	150	545	556	1650
Hero Motoco	20	2050	2107	1140
Nifty 5100 PE	100	33
Yes Bank	130	340.5
Bank Nifty Fut	25	10010		700

 Nifty medium term view

Trend	Up
Initiation Date	12/06/2012
Initiated at	5116
Reversal if closes below	4880

Thought for the day

Success is a three step journey : Planning , Execution and bridging the gap between them.

Money  Management rules of Jesse Livermore

Don’t buy entire position all at one time.

1. Do not take your entire position all at once.

2. Wait for confirmation of your judgment—pay more for each lot you buy—dollar average upward.

3. At the beginning of each trade first establish in your mind the total, exact amount of shares you want to purchase if all goes well, or specify the amount of dollars you are willing to commit; do this before you begin the trade.

Never lose more than 10% of your capital

The 10 percent loss rule became Livermore’s most important rule for managing money. In some respects, it is also a key timing rule, since it often automatically sets the time to exit a trade—when you have lost 10 percent or more of your invested capital, you must exit the trade. Also, a trader must set a firm stop before opening a trade. The consequences of big losses are drastic—you must gain back 100 percent to cover a loss of 50 percent.
 

Remember, never meet a margin call, and never average losses.

 

Always keep a cash reserve

The successful speculator must always have cash in reserve, like a good general who keeps troops in reserve for exactly the right moment, when the odds are in his favor, and then moves with great conviction, and commits his reserve armies for the final crushing victory.

 

There are times when playing the stock market that your money should be inactive, waiting on the sidelines in cash to come into play in the stock market. It was Livermore’s belief that in the stock market:

 

Time is not money

Time is time

And money is money.

You need a good reason to buy a stock and also  a good reason to sell

Stick with the winners—as long as the stock is acting right, do not be in a hurry to take a profit. You must know you are right in your basic judgment,or you would have no profit at all. If there is nothing basically

negative, well then, let it ride! It may grow into a very large profit. As long as the action of the overall market and the stock does not give you cause to worry, let it ride—have the courage of your convictions. Stay with it!

Always withdraw the profit

Livermore recommended parking 50 percent of your profits from a successful trade, especially where you doubled your original capital. Set this money aside, take it out of the stock market so you have to make a

conscious effort to put it back in. Put it in the bank, hold it in reserve, lock it up in a safe deposit box, stuff it in your mattress—just put it somewhere safe. Like winning in the casino, it’s a good idea, now and

then, to take your winnings off the table, and turn them into cash. There is no better time then after a large win on a stock. Cash is your secret bullet in the chamber.

Stay away from cheap stocks

One of the greatest mistakes that even experienced investors make is buying cheap securities just because they are selling at a low price. Although in some instances stock demand may push the stock from a small per share price of say, $5 or $10 a share to over $100, many of these low-priced

stocks later sink into oblivion by going into receivership, or else they struggle for years and years, with only the slightest prospect of ever returning a profit to their shareholders.

Market Update for 22/06/2012

 

Nifty Hourly Chart

                                                     (Click on the image to enlarge)

Today market has ended up with significant gains. Nifty closed at 5165 up by 44 points. Banking,capital goods and reality were  major gainers in today's session. SBI,JP Associates,Reliance Infra, DLF were some of the major gainers in today's trade.

Nifty has breached important resistance at 5143 which is a bullish sign. Do not short market based on the assumption that it cannot go further. Even if you take short , based on a proven method , once you identify that market is moving in reverse direction EXIT.It is not necessary to win every trade. BUT we have to win average number of trades.

The next target for Nifty is 5193. Traders can book partial profit at this level.

Nifty Daily Chart

Before few trading session Nifty was range bound and it was alternatively closing above and below 200 DMA which was confusing the traders. From past two trading sessions Nifty has sustained above 200 DMA. Now it is expected to move towards the peak made on 18th which is at 5193. You can also see in the graph that 100 DMA is at 5199 which can also act as resistance. So further upside can be expected above 100 DMA. Above 5200 target will be 5300-5400. Reversal below 5050.

Chart of the day

Before few trading session there was a peculiar situation where chart f Nifty was looking Strong and Bank Nifty was looking weak. In fact we had suggested short on Bank Nifty at 9760 and covered at 9600. Nifty and Bank Nifty were moving in opposite direction. But now the positive correlation is reestablished.

Bank Nifty is looking bullish, there is a minor hurdle at 10100, but the target for Bank Nifty is 10400, reversal below 9800.

Open Positions

Scrip	Type	Qty	Price	CMP	P/L
Havells	Long	150	545	246.7	255
Hero Motoco	Long	35	2050	2071	735
Tata Mot	Long	100	245.5	248.3	270

Today's Trade

Scrip	Qty	Buy Price	Sell Price	P/L
Bata	100	810	840	3000
Jubl Food Fut	250	1177	1188	2750
SBIN 2100 PE	125	69	14.25	-6843
SBIN 2000 PE	125	26	3	2875
Nifty 5100 PE	50	45	23	-1100

Nifty medium term view

Trend	Up
Initiation Date	12/06/2012
Initiated at	5116
Reversal if closes above	4880

 

Thought for the day

When you find yourself in the valleys of life, don't kill yourself with grief. See it as a strategic position to have a clearer view of your ultimate destination - the peak.