Wednesday, December 30, 2009

Dull days in market

The Nifty continues to inch upward, with a bullish bias. We are around 5200 which is just 20% lower than the all time highs for the Nifty.

The market is also at the psychological resistance of 5180 - 5200.  Since the trend is UP, it is sensible to take trades in the trend direction. Our strategy is to search for dips to buy.A high risk, high reward trade is to buy puts since 5200 is a resistance area. By adjusting your volumes, it is possible to do both trades (for the PUT's , keep volumes low).

Many charts show base building patterns. Perhaps, it is wiser to focus on individual stocks and ignore the movement of the Nifty.

In the Nifty scenarios, briefly discussed above, one possible scenario is for the Nifty to continue going up without any pause. We are likely to stay away if this happens. A dip or consolidation is required for taking a fresh long trade.

What will the New Year bring?

Well, extended trading hours for sure. We could easily continue with choppy market conditions as we move towards the union budget. A traditional pre budget rally is quite possible. Will that be the end of this up move? Maybe.

A New Year Resolution

One, focus on gaining epertise in one or two trading strategies. Two, write your trading journal, every day.

Have Fun!


Mario said...

Guruji, may be you have already addressed, but hopefully worth repeating: how do you derive leading indicators for any chart? I have been reading John Murphy, but whatever he says as leading indicators (like MACD) have now turned out to be laggging indicators. Kindly help.

Prashanr Sarnaik said...

As per your tip I tried to study chart of Venus Remedies and observed a breakout at 228-230 and accumulated few shares @ 235.00 and today it went to 291.00. Was it a Head and Shoulder Bottom Pattern Sir?