Wednesday, September 2, 2009

Focus on individual stocks

As the Nifty goes nowhere, it may be wise to focus on trading in individual stocks.
Traders may like to select at the most two stocks to trade in. The trading may be intra day, or, swing trading involving the overnight carrying of positions.
The first step in a trading plan is to determine the trend. As of now, the Nifty remains clearly in an uptrend. Therefore, stocks may be traded with an upward bias. This means, identify stocks which (a) may be ready for an upmove after a dip. (b) Stocks already in a rally, which may continue to move up.
Since I like to buy dips, I will focus on this part of stock selection. Look for a short term oscillator to become oversold. Share prices must dip with the decline in the oscillator. If you wish, you can use a 5 period RSI on end of day charts. If the RSI moves below 40, then goes up, this could well qualify as a dip that could be ending.
Some stocks that come up for Thursday, include, Grasim, HCC, HDFC and ITC. This is not a recommendation to buy any of these stocks. I am explaining how a short list can be created. Look at the charts and pick up two stocks. Now, identify a stop loss, a possible traget and buy on signs of strength during the day.
Also consider identifying stocks on themes. Today, the themes were: Reliance cap will gain because the Govt is taking a neutral stance in the brothers cases, and, IT stocks could be in flavor since the Rupee was falling. The actual buying / selling should be done on the basis of intra day price action.

4 comments:

Gaurav said...

The current pattern on Nifty daily charts suggest a triple top or ascending triangle? Both these patterns have a opposite interpreation. On a longer term basis we also see a inverted heads and shoulders with neckline around 4700. Sir what is your opinion on all these patterns?

kaustubh bedekar said...

sir i am kaustubh bedekar from nagpur. i am intrested in swing trading and intra day option trading kindly help me
regards
kaustubh

Shazia said...

Sir,
I am very much enamoured by the way you take pains to explain the technical aspects of the markets. However i have seen that apart from the technical analysis, there are others things also which shoud be taken into consideration when initiating a position, the most important of it being the expectations of the markets. To read into the markets behaviour is also very important and these days technicals are just acting as support or resistance and not giving us any direction of trade. Today the nifty futures closed at a discount. Wonder if it will open negative tomorrow?

men said...

Mr. Sudarshan, we got around 50-70(hi-low)points movement yesterday and today, which is good enough? Do you get more than that when you average your buy/sell orders for the year/day? Personally I feel majorit of the small investors would book their positions every 20-40 points on an intraday basis.
With a capital of 2L and regular booking of profits every 25 points(25*20=500) one could get a ror of 50%, which is damn good, yes the market is boring now BUT IS SURE EASY TO MAKE MONEY ONLY one has to be patient.
There is a link http://www.vfmdirect.com/forums/show.cgi?topicid=1251878152#1251996382 where in I have given a method which suits may be ONLY ME.
Happy trading!!!!!!!!!