SENSEX - In the tough range

BSE SENSEX is in tough range of 16064 and support range of 14672. With the basic mindset of bullish market psychology our basic strategy would be to buy sell off in the market. The reason I have not been able to find any good investment candidates is that there are none which are obvious. With US Jobs improvement, Monday could bring surge of buying in India. Its hard to know if it would be a selling opportunity since the uptrend has not broken yet.

There have been six distribution (heavy volume selling) days in last 10 days. Time to be little cautious and raise your stop loss on all the positions.

Well, there is always bull market somewhere in any market conditions. Following is not a buy recommendation but a study chart for you. Try to understand the basic on markets behaviour before investing into it. I started this blog just to educate everybody. Stocks are not easy investments. They are driven by greed and fear of huge marketplace. Most of it is dominated by big players. Small investors are always crushed under the huge power of capital. So protection should be our first priority and risk should be well calculated. Most of us know to buy stock but we do not know where to stop loss and exit the position once market proves us wrong. We tend to hold the bag for a long time with big losses in our accounts.

Look at weekly chart of Orchid Chemicals. Here I have marked two black arrows. These are your guides about when you should consider exiting this stock if you buy it today.

Stop loss is one of the hardest concept to learn and practice. We enter market with basic need to make money and virtually everybody ends up making big losses on few of their positions. The reason is we do not have any Stop loss strategy.

We see positive momentum has started to build at the bottom chart. That's a great beginning. This stock recently made a higher low. Higher low is a low which is above its previous low. In case you buy this stock and it turns around then you must keep a stop loss at 78. The meaning is that you sell your stocks if it goes below 78.

Next week will be very unusual

Happy Trading

Anil