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.

 3 simple rules of trading by Alen Hull

They look simple but following them is difficult for most of us and these are the rules which are frequently violated by most of the traders.

1 Buy a rising share - sell a falling share

2 Always use a stop loss that moves up with price activity

3 Never risk more than 2% of total capital on any individual trade

Buy a rising share - sell a falling share

This rule is often confused with 'buy low - sell high' which has 85% of share traders buying shares that are going down in price in the hope that they will immediately turn around and start going up. This mistake leads to the sad statistic that 85% of share traders lose money.

'Buy a rising share - sell a falling share' is all about buying into markets that are already rising, which is so painfully obvious that the majority of share traders, ie. 85% of them, don't do it. The reason for this is simple and psychological; human beings are counter-intuitive by nature. So in order to be successful we must be prepared to stop thinking like everybody else.

Always use a stop loss that moves up with price activity

An initial stop loss is a price level that defines the point at which we are ready to admit that the market is not behaving as we would expect and we are prepared to sell. In other words this is the point where we admit that the trade is a failure. All share traders have losing trades and the only fatal failure in the marketplace is the failure to execute one's stop losses. When the market moves in the direction we expect it to then the price at which we are prepared to sell should move with it, locking in profits. If our stop loss has moved beyond our entry price (the point at which we bought into the market) and we fail to sell if it is triggered, then we are being greedy; this will also prove fatal.

Never risk more than 2% of total capital on any individual trade

The game of coin toss is a fair game of chance where no participant should expect to win or lose over the long term. As global equity markets have risen by an average of 9% per annum for the past 100 years, all share traders should expect to profit by an average of 9% per annum. So why do only 15% of share traders make money? Answer…the ability to survive.If a participant wishes to remain in a game of coin toss for the long term then they would have to be able to sustain a string of up to 8 consecutive losses. This is because a string of 8 consecutive losses is likely to occur in a game where there are 2 equally possible outcomes. The same logic applies to the Stock market where the majority of share traders in the U.S. in the 1990s had an average life expectancy of only 8 trades. So in order to survive in the marketplace long enough to enjoy the average return of 9% per annum over the long term, it is essential that share traders can sustain an extended string of losses. By only risking 2% of total capital on any individual trade, a share trader can sustain up to 194 consecutive losses.

Market update for 29/06/2012

Nifty hourly chart

The markets closed with moderate gains today with defensive sectors like FMCG and consumer durables being the biggest gainers. Banking and oil & gas lost significantly while realty and capital goods closed with moderate declines. Nifty closed at 5149 up by 7 points.

This consolidation is happening from past few trading session. Let us not blame the market because it is always right , it is traders like me and you  will be wrong. Usually consolidation happens after a major rally or if market is waiting for some major event to happen. Explosive moves will be followed be consolidation and consolidation will be followed be explosive moves.So we can expect a major move in the market  . The possibility of breakout on upside is more than the downside.

Nifty Daily Chart

There is no significant change in daily chart . Nifty is facing resistance at 5200 levels which is 100 DMA . Nifty has sustained above 5070 which is 200 DMA. We need a close above 100 DMA to re initiate long in Nifty.

 

Chart of the day

 

Tata Steel

Tata Steel is consolidating between the range 432-405. Now Tata Steel is at upper part of the range . IF Tata Steel breaks Rs.432 on closing basis then we can expect a target of Rs.444-457. On the other hand IF it breaks Rs.405 then the target is Rs.390. So trade accordingly.

Open Positions

Scrip	Type	Qty	Price	CMP	P/L
Yes Bank	Long	65	340.5	331.6	-578.5
Tata Mot	Long	100	245.5	240.35	-515
SBIN 2100 July CE	Short	125	65	65	0

Today's Trade 

Scrip	Qty	Buy Price	Sell Price	P/L
Hero Motoco	65	2053	2095	2730
Bank Nifty fut	25	9975	10020	1125
Bank Nifty 9900 Put	25	260	210	-1250

 

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 

Speculation is dealing with the uncertain conditions of the unknown future. Every human action is a speculation in that it is embedded in the flux of time. –Ludwig von Mises

I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up. I don’t mean of course that in a bear market caused by a war, ammunition shares do not go up. I speak in a general sense. But the average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think. It is too much bother to have to count the money that he picks up from the ground. —Edwin LeFevre

Market update for 28/06/2012

Nifty hourly chart

Nifty is still consolidating in the trading range of 5093-5191. The expiry is expected to happen around 5100-5191 and we may not notice any major changes . The expected breakout can happen in the next  FnO series.

I repeat the same estimates that 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

 

In EOD chart I do not see major weakness. Nifty is consolidating from a week and option buyers might have lost money because of time decay. Nifty is trading between 200 and 100 DMA which are at 5200 and 5075 respectively. The short term reversal will be closing below 5020 and medium term reversal will be closing below 4915. This consolidation can be considered as continuation pattern if Nifty closes above 5200.

Chart of the day

Bank Nifty is forming higher bottoms but the peak is at 10200-10100 levels. If Bank Nifty manages to cross the intermediary hurdle at 10100 levels we expect rally upto 10300-10400. Reversal will be closing below 9900.

 

Open Positions

Scrip	Type	Qty	Price	CMP	P/L
Yes Bank	Long	65	340.5	334.5	-390
Tata Mot	Long	100	245.5	239.5	-600
Hero Mot	Long	65	2053	2054	65
Bank Nifty fut	Long	25	9975	10004	725
Bank Nifty 9900 Put	Long	25	260	230	-750

Today's Trade 

Scrip	Qty	Buy Price	Sell Price	P/L
Nifty 5100 PE	100	33	8	-2500
Hero Motoco	65	2053

Nifty medium term trend

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

 

Thought for the day

" The investor's/trader's chief problem - and even his worst enemy - is likely to be himself "