Trade only when right

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This time budget did not bring the 10% market bounce as it did last time. After the 10% bounce at last budget of 2009, market basically just keep rolling in a range bound trend. I am not convinced that huge rally is about to open out. All the stocks I track are getting sold. There is no real buying pressure to see. Small change is prices last Friday, appear deceiving to me. As if, somebody is just waiting to sell out all this position to me.

Technical indicators are extremely oversold and some kind of bounce is very likely. I am very afraid of sugar sector stocks. They are just breaking down very hard. May be a good choice to short when they bounce back on this rally.

To make money, you need not trade every day. You must have your strategy to enter and exit the positions. Today's market is very confused. The greed and fear are going hand in hand. Many people took positions, possibly on margin to sell there positions as soon as the budget rally happens. Unfortunately market is not that predictable. It does not do what you wish it to do. That is why, you should be following the market and not expect it to do what you wish.

Look at the following stock chart of Cholamandalam DBS. This stock sold off very hard and then rallied back to 70s. Now its basing in 60-70 range. This 60-70 range trading is called consolidation. This is phase where professionals take there positions and retail traders sell off their holding. Once the 70 is broken then will stock will keep growing. This is one of the strategies you could trade. Trade only when its right to trade.



Look at Hunung Toys and Tex, It has the similar pattern. It got sold off hard then bounced and now it is consolidating. The challenge in these positions it to wait until it breaks out of this consolidation range. Why wait and not buy right now? The reason is we will not know how long will it keep consolidating.



So look for stocks which are consolidating in a range and wait for the breakout. Trade only when right.


Thanks
Anil
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Stop Loss: Sell Stock if it closes below this price. It tells you that market has proved you wrong. Accept it.

Hard to pick stocks in this environment

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I could not find really good stock for investing right now. The technical damage suffered by most the stocks is too much. None of them are inviting for short term traders. Most of these have to consolidate in a tight range before they bounce back big. Certainly this is not the time to invest most of your money. Even a short bounce in stock is sold off quickly. Be safe than be a looser.

Please add following stocks to your watchlist

Orchid Chemicals is only one going up in this market



Following are break-down stocks

Thanks
Anil
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Please forward this email to your friends and family members to help them build wealth under technical stock market guidance.

Disclaimer: Please trade with your own judgment or with the help of investment advisor. We are not responsible for any financial losses.

Stop Loss: Sell Stock if it closes below this price. It tells you that market has proved you wrong. Accept it.

Man made disasters and man made solutions

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Euro zone Greek troubles are getting deeper as people are in panic mode. I believe these are man made disasters and can be solved by man. The paper money financial system will have its peaks and valleys over the period of time. The system was established to have more convenience and we can't be perfect at the system. It will take time for man to realize the problems and then he will fix it. Human race is growing intelligence. We build on our knowledge and move forward. Problems bring opportunities to us to fix our behavior so we could build better future.

So, the money issues in Euro zone will certainly damage the EURO in near term but it will teach important lesson to us and others. That will eventually build more sustainable financial system. Panic is certainly not the option to go with.

As far as Greek bailout, it will most probably be provided to them. We should consider two possibilities. In case they do not get the bailout money then all the stock markets will correct even more. The simple reason of this is the Dollar strength will bite into asset valuations. This is the remote possibility. In next couple of weeks, the news of Greek support would be released and then we will see sudden drop in dollar strength and gold and Euro is likely to raise.

It also means the the stock market could also raise in coming days. The best thing market did last week was just to hold on to its current level. That is a signal to us that a short term bottom is in place. This is the time when most people exit out and wait on sideline. Since the sellers are now not the part of the game, buyers will raise the quotes and demand premium from others. As sellers watch this quotes go up, they will get impatient and start buying at higher prices than what they sold out at. This will create another round of panic buying similar to panic selling what we saw earlier this month. This will create opportuties to exit on your positions and I am pretty sure that we will have another leg down after which these sellers will not be part of the bigger rally that will eventually unfold.

Please add following stocks to your watchlist

Adani Enterprises
Ajanta Pharma
Bajaj Auto
Bank of Baroda
Financial Techno
Geometric
J K Tyre
Network 18 Media
orbit corporation

some interesting news for you http://www.reuters.com/article/idUSTRE61D0ZC20100214

Thanks
Anil
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Please forward this email to your friends and family members to help them build wealth under technical stock market guidance.

Disclaimer: Please trade with your own judgment or with the help of investment advisor. We are not responsible for any financial losses.

Stop Loss: Sell Stock if it closes below this price. It tells you that market has proved you wrong. Accept it.

Bottom in Sight

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I believe we are very close to the short term bottom. The panic sell what we discussed before has been seen in this market. Friday almost 90% volume was on sell side. Such a extreme sell volume is sign of panic sell off.

The call for bottom might be little bit early but hey, sometimes we have to make a call and move on. Keep enough bandwidth for averaging down later in case we are proven wrong. You might have to cut your losses too. But the point is the risk today is much less than the risk at NIFTY 5300 levels. Chances are that there will be a bounce and it might fail but we don't know that yet. What we know is panic sell has taken place in India and also in US markets. In fact the panic sell level has been seen in all the countries.

The story they used to get the sell off done is Euro zone debt defaults. Think about it, the story has been floated for few days. Don't you think the top brass new about is already. Now the story has been successfully implanted in individual investors mind that world is going to end and you must sell your positions. The emotional traders takes this story and becomes a hypnotized puppet that simply will react to the situation and start selling. The task will be accomplished for market makers and they will suck up all the best in the lot. You, the story carrier will be left alone to reflect on your reaction after you are out of the game.

Well, I am not telling you to go and put all your money in the market. What you need to think about the power of media. It changes your personality and forces you to take actions at wrong time, like buying at the top and selling at the bottom.


Please add following stocks to your watchlist

In last correction NIFTY took support at 4600 level. We are very close to that. So even if there is no possibility of big rally, we should anticipate at least a bounce near 5000-5200 level.



PNB is a very strong stock in this correction. It has just closed near its support level. We should book profits around 900-950 level.



Ranbaxy is on steeper sell. It has just touched 150 line which should act as a support. Might be a good start.



SBI has broken 150 day line. I think that was done to trigger selloff at massive volumes. It could bottom soon and claim its 150 day line as value buyers step in.




Torrent Pharma is making new highs in correcting market. Keep watching it.

Thanks
Anil
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Please forward this email to your friends and family members to help them build wealth under technical stock market guidance.

Disclaimer: Please trade with your own judgment or with the help of investment advisor. We are not responsible for any financial losses.

Stop Loss: Sell Stock if it closes below this price. It tells you that market has proved you wrong. Accept it.

Getting Closer to bounce

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Dear Investor,

We are closer to the end of correction than anybody else might think. The reason why I think so is following chart. We have just touched 150 day line last week. We are also at bottom of support box. Its the bottom of the blue range box. We have two heavy volume buying days. These events point to end of correction. But I want to show another chart.

US Dollar is strengthening. They reported very good GDP. Euro zone troubles are not easing for now. All this will add further strength to US Dollar. The USD has just crossed above 150 day line and it is still holding it. This time it is not crossing back quickly below 150 day line. This is very dollar positive and gold negative. FII will definitely sale there positions if this continues to rise. I believe they already have started selling. These are the smart money owners of the market. They are always ahead of the crowd. They sell their positions when everybody is willing to catch the bottom and step out. Of Course they will provide support when the valuations become cheap and hold your sold positions to sell it back to you when you are ultra excited to double your money. Any ways, Dollars strength is not good for NIFTY in near term.

Here is the most interesting chart of this week. Comparison on USD performance to NIFTY performance. Red line is USD. Black line is NIFTY. If you look carefully as the dollar continued its slide NIFTY continued to ride higher. Now Dollar is rising and NIFTY is falling. If our range bound market thesis is right then we are very close to the end of correction. But you need to watch the Dollar. It will invalidate everything else on other charts

Following stocks are at the bottom of the range

Thanks
Anil
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Disclaimer: Please trade with your own judgment or with the help of investment advisor. We are not responsible for any financial losses.

Stop Loss: Sell Stock if it closes below this price. It tells you that market has proved you wrong. Accept it.

Strong Stocks in this correction

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Dear Investor,


Market correction is still on. The ultimate sell off is not yet here. I advise some patience to the members before doubling down on your position. Following NIFTY chart is clearly marching towards the support of 4900. I see most of the stocks in NIFTY and MID cap space are breaking down. The only sector holding well is Auto.

There is a big difference between current correction and corrections before. The optimism before and now is different. Before investors were all bullish and were expecting spectacular earnings growth. Well to a large extent we are in growth path but the growth is certainly supported by government liquidity supply. The supply is expected to tighten. Just now I heard that US is going to put a spending freeze.

Even though I am bullish on the market, I do not like to buy until 4775 is hit on NIFTY. We are likely to see some bounce before the correction continues. Please give at least 4-6 weeks before investing any more money. I am not talking about daily 1-5% stock fluctuation. We do not participate in day trading which is very risky and 99% people loose money in that. It better to just watch now.

Following stocks are standing very well in this correction. Its not a call to buy these since we are in correction. Keep them on your shopping list when time is more inviting.

Surprisingly Infotech enterprise is moving higher in such a market conditions. Somebody knows something that others do not know about this one. well, Lets watch it for some more time.

Perfect Breakdown Stock

Indiabulls real estate stock formed a perfect breakdown pattern. Its highly unlikely that this stock will be able to survive the correction. There are two possibilities about it, One it is getting ready to bounce hard or it will just crash from here. Next few days will be key to see if it holds its support line.

Another strong standing bullish stock - Havells

Rule no 1 - Do not buy stocks below 150 day moving average line. Remember it all the time.

Thanks
Anil
Got a Question/Send your contributions for other members: mailto:indiastocktrend@gmail.com


Please forward this email to your friends and family members to help them build wealth under technical stock market guidance.

Disclaimer: Please trade with your own judgment or with the help of investment advisor. We are not responsible for any financial losses.

Stop Loss: Sell Stock if it closes below this price. It tells you that market has proved you wrong. Accept it.

Game Plan for Panic Sell

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Dear Investor,


They found the reason to get the selling started. In India, its either buy buy buy or Sell Sell Sell. Just a rumor could get people so excited to act on their immediate emotional urge. Stock Market moves on emotions of people. Most people get kicked out of their positions just because they do not have any game plan.

Today, I want you to think about your game plan for this panic sell off. Following is a bull market run of market from 2004 to 2008. I have red support line that is usually the support line. Markets do not break these lines. Next line is 400 day long term support line. Its impossible to break this line in bull market. In fact the day market touches 400 day line, that's the best day to enter into market.

When markets break 400 day line and stay below is for more than 4-6 weeks. You have entered in long term bear market. Well, lets not talk about bear market since we are noway close to it. We are in full fledged bull market and need to trade with bullish bias.

Look at the chart of last few months. We have 100 day, 150 day and 400 day lines representing the support. With current force of selling, I believe we will break 100 day line. The challenge for us will be to enter at 150 day line touch or to wait for 400 day line touch down.

It is very likely that most of people will run of the shelter now. They will start dumping there positions and go to cash. Many people get sucked in the last few weeks of top. The market maker likes to have everybody on board and then the colors change. Market corrections and bull runs are part of investors life. They should not be cause of anxiety and neither it should make you happy, overconfident bull.

Markets will correct no matter what the situation is. Markets correct to rise again letter. I have learned my lessons, you need to learn yours. Send me your story if you would like to share with others.

Do not panic with the current sell off. I have repeated many times that you should be in cash position at least 50% or more. I waited for long time for the correction, well it finally has arrived. It will bring better opportunities for all of us. You could average down around 400 day support line or take new positions.

Have your game plan. Do not succumb to emotional and market pressures.

Thanks
Anil
Got a Question/Send your contributions for other members: mailto:indiastocktrend@gmail.com


Please forward this email to your friends and family members to help them build wealth under technical stock market guidance.

Disclaimer: Please trade with your own judgment or with the help of investment advisor. We are not responsible for any financial losses.

Stop Loss: Sell Stock if it closes below this price. It tells you that market has proved you wrong. Accept it.