Friday, April 24, 2009

Markets at another inflection point

I am in Nagpur, for the CNBC Investor Camp. My trip required a fair bit of spare time since the only flights from Delhi to Nagpur are in the morning, requiring me to reach one full day before the camp. This caused some amount of disturbance in regular tasks, and, the blog could not be written.

The Nifty is now close to 3500 which has been the upper limits of a trading range that has now lasted for 10 days. A close above 3500 will justify a long position (buying) for traders a well as investors. For traders, the task is simpler. Buy with stop losses. For investors, the buying is probably high risk. The market is due for a correction. The dip does not come on demand (just because i say so), but on the market's own wishes. But, the risk does not go away. For investors, therefore, the approach should be 'long term' - I am buying now. I am buying because of a trading range breakout. I will ot worry if the Nifty were to fall. If the breakout is genuine, I will be able to make a paper profit. Now, for those investors who are uncomfortable with this thesis, my suggestion is to wait for a correction.

6 comments:

solo said...

Hello sir,

Hope you are enjoying at the Nagpur.

My query is on breakout trade.

I generally wait for breakouts to happen before entering in to the trade.This break could be from a range or an ascending triangle. The ideal conditions for volumes is acceptable but this happens only few times.
When the price starts moving just above the range it stimulates me to buy. Well, idun know why...

But the problem arises when the prices move very fast above the range. Now because it becomes difficult for retail trader to follow all the breakouts,because of varios problems of software etc., we generally notice them when they are already occured.It streches our stoplosses.

Now if we wait for a pullback it does'nt happen and prices keep on rising and because of it most of the trades are skipped.
Retractions in the next few days(uptto the breakout level) are unnoticable because of access to intraday charts of one day only which my broker provids me.

Is there a way to trade such break out at the time when they are just happening so as to have shorter stoplosses.
And how to identify and then avoid most of the falsebreakouts.

men said...

Sir,
From my point of view there could be some resistance around 3550,3700-25 and one major one at 3800. Are these levels good enough to have a naked short the nifty?
Thanks,
Regards,
Sudhin Bathija

stockchart said...

HELLO SUDARSHAN SIR,WHEN WILL BE THE CNBC CAMP AGAIN IN OR NEAR SURAT ??...PLEASE LET US KNOW..AS I MENTIONED IN AN E-MAIL TO YOU A LONG TIME BACK THAT I HAVE BEEN STUDYING TA SINCE 1994-5.I SALUTE YOUR UNDERSTANDING OF THE GREAT SUBJECT,,ALTHOUGH YOUR APPROACH IS TO ALWAYS REMAIN WITH THE TREND,SOMETIMES A COUNTERTREND ANALYSIS WORKS A LOT BETTER,,,FOR ALL THE READERS HERE I WOULD LOVE TO PUBLISH AN ARTICLE ON MY BLOG WHICH I WROTTE IN OCTOBER,

Thursday, October 16, 2008
india markets hit the bottoms

technical analysis demands,certain evidence which CAN suggest that the prevailing trend has been reversed,,,markets so many times produce such mooves that a technician starts believing that the end of the current phase is very much near,but market fools him,such things happen so many times during a strong trend that at one stage he just stop looking at such reversal signals and just wait for the LATE BUT CONFIRMED reversal signals,and he argues that ,,let the market itself say that its turning !!!!!!!....infact ,nothing wrong in such an attitude,but...at present the whole world market and india in particular is producing such signals that ,,,,,clearly suggests TO ME me that ...theres a very very high probabilty that sensex and nifty had seen their respective bottoms at their lows yesterday....such strong bearish trends cant reverse their course all of a sudden and overnight,,there will be some pattern formation on daily charts ,there will be abottom testing,there may be another small leg of downward move to produce positive divergance for the rsis and rocs ...a 3-6 months consolidation phase will be there........and as bottom formation in general phases out sector wise..some weak sectors will be seeing still lower levels in the medium term future,,but most of the active and fundamentally stronger stocks have seen their bottoms as on yesterday..
as we all know, psychology plays the most important role in markets,and at the pick of a typical top or a typical bottom the greed & fear factors reaches there extreme,,although there is no measurement for them...by just collecting news paper clips,,video clips of tv shows for one week..and watching both in a silent room can give a clue..in my opinion the fear factor is at its best now than ever before !!! fear among who ?? ,,a day trader is in its greep,an investor is out of the markets,,,infact selling his holding at current lelvels... there is redemption pressure on mutual funds.,an economist draws a gloomy picture....govt. auhorities at last accepting that yes we may be in recession{read mr.bernanke}..and the whole media..is in the bear hug......the picture is exactly reverse of the one which we saw in jan-08.....remember my words the long term india story is quite intact,,find out a country in the whole world thats been growing in the recent decade {after china} with a gdp of over 7%...so,this is the BEST TIME TO INVEST IN INDIA.
BJNAIK.17 October, 20083:47:08 AM bjnaik@hotmail.com

kaustubh said...

Hello sir,
This is Kaustubh Bedekar from Nagpur.On saturday 26/4/2009 you ware at Pride hotel for the Investor meet Organised by CNBC tv 18. It's was my lucky day I got to interact personaly with you. Your guidence has provided very useful information for investors like me.I hope we will continue to receive valuable information from you.
Thank YOu.

saket said...

Thank you
I would like to take this oppurtunity to thank sudarshan sir who was very gracious and patient in answering my queries after the nagpur camp.It is a very important phase in my career and my life and his input and guidance would help in making the right choice.
I was very nervous intially but sir's helpful attitude made me comfortable and i could ask all my queries which were answered.I would be always indebted to you for this.Thank you for your support and being a teacher in the true sense.
Saket Chandak

Indrajit Mukherjee said...

Sir Ji,

Thanx 4 ur valuable post even in tour. As I feel u as a peak for the budding TAs, need ur comment on my latest post on end of bear market at Has The Bear Market Ended? A Study On 200 WMA. Boss, thanx for ur comments.