Saturday, September 26, 2009

Conversations Sept 26

Shazia says:
"In todays blog you are of the view that a small correction may have started, but on tv you were reluctant to go short at the end of the day. I was short on the markets but i hurriedly covered after your comments. "

My Notes: I do feel that we may be looking at a small correction. But a correction is a move against the main trend, which should be left alone.
First, We have enough evidence to suggest that this is a strong up trend. So, going short is trying to go against the trend.
Second, the Nifty has a consistent pattern of a range expansion, then a series of consolidating bars. The minor weakness may infact be part of the consolidation. Not easy to trade!
Third, we are seeing a holiday on Monday. So, we have two days in which international markets will influence us without our response. Who knows how the markets may open on Tuesday morning. I said on TV "The best approach is to go flat. But, if you want a trade, you should be long, since the trend remains up".

Now, I have explained the reasons for my view. I also have a suggestion. When you take a trade, have a clear view. Write down these ideas on paper also - (a) Identify the reason for the trade, (b) A Stop Loss, (c) A profit target or trailing stop mechanism (d) The point at which you accept that the trade is not working even if the stop did not hit. (e) Number of shares / contracts that you will hold. Keep in mind that your loss on a single trade should not be more than x% of your capital (you decide the x%) (f) maintain a trading journal in which you write every evening, without fail.

Once you follow these ideas with discipline, you will realize that you will never react to any talk on TV. That will be the 'A-ha' moment for you.

Nitin Damle asks:
"I think short term tone of mkt. is down we will see a correction up to atleast 4850. Can we go short with stop @ 5040 spot nifty?'

My Notes: I assume you are following some technical method that has given you a short signal. If this is so, go ahead and follow the signal. For traders who are / wish to go short, above 5040 is the correct stop since above this level, the Nifty begins to make new multi month highs again.


ronnie330 said...

Nifty goes to correction but some srcips are near to breakout. Should we go long on such scrips?

Eg : Educomp

Rohan Shenoy said...

I think the following can be taken as signs of strength:

Sign 1:
After Wednesday(23 Sep) down day with increased volume, the next day(24 Sep) was a up day. On 24 Sep, NIFTY was in red for the first few hours, but the volumes were not great. Infact the volume was almost half of what it was on 23 Sep. Then in the later hours of 24 Sep, the price recovered from its low with high volume and closed near its high.

Sign 2:
Sep 25 was a down day with low volume. And the volumes were low inspite of foreign market cues being negative.

On charts, the next pivot high is 5150 - 5160. So can we expect that NIFTY with atleast hit 5150?

Thank you,

Viral Rajnikant Dholakia said...

Dear Sir,


What I liked about you (from the teachings of this particular posting) is that -- You've not disregarded the view of Nitin Damle who wished to go Short. This despite the contrary view that you've expressed in the very preceding paragraph that- Traders should go with trend when in dilemma.


Nitin has shown interest in shorting & u backed his view depending upon his analysis (binding for him), even if that is in opposite direction to market trend.


The fact that you being a professional & in a much better position (by ur experience & analysis) to guess the market trend... being aware that markets are slave of no particular entity, how much ever be the person knowledgeable.


Hence, you're aware that it is not advisable to disregard any particular View on the market. Different views have different perspective, and who knows which view will sell its story successfully in the future.


That is the crux of working of stock markets... No view is wrong unless proved so from hind sight. That is why we have never-exausting list of sellers & buyers meeting at the same place with thier converse-natured bets... based on their diverse views.

men said...

Could you please suggest if Infosys has reached its top for the time being, reasons are 2415 was the last top in 2007, and now we had 2415 and the stock was weak on Friday or one should still wait for a confirmation. Also how should an investor look at such situations in general. For such cases what would be low for getting the fibo levels will it be 52 week low or the last previous low. And finally when should one start buying this stock on delivery basis.

Shazia said...

Thank you for taking the pains to explain and your suggestions are valued as much as your comments. To add to this I can say that i watch tv muted unless you come along and i unmute to listen to your analysis, and i do not go by any comments on tv at all.

Viral Rajnikant Dholakia said...

One of Your Past Post...
Tuesday, December 16, 2008

A market that goes up is in a bull trend Keeps up going up, doesn't it ?

The Nifty seems to have decided on a one way track - up. Just eight weeks ago, the Index made a panic low at 2200. Since then, much water has flown through the Ganga. At 3065, the Nifty is up 27% from its lowest close, and,a whopping 40% above the 2200 lows. That's an up trend. An up trend is bullish.

Is this the end of the bear market ? Frankly, I doubt it. But, while the market moves up, we have to go with the flow, which is up. The Nifty can go to 3200 (seems likely), and maybe all the way to 3700 or even 4000. If it can fall from 6350 to 2200, it can also go up! After all, the Market will always surprise us!

The above was just a Recap of One of your past posts...

At one point your had mentioned that markets can go all the way to 4000 -- to surprise everyone of us. Are we knocking at 5000 ??

Knock! Knock!... Is it 5k??

If 4000 was surprise then... What would we call 5000 ? Super-Surprise??

This effort of reproducing Mr Sukahni's post over here is simply to Warn/Alert complacent investors... that it is time to be cautious, especially for Investors.

Well, Traders are always safe with those small manageable Stop Losses

Does our Sir want to Add a line or two on this -- with whatever be his views ??

Nirav said...

Dear Sir,

I have mailed you about the Nifty Forecast. Kindly check that mail and go through that predication. And please give feed back of that.