Wednesday, October 20, 2010

Volatile Markets are a sign of Distribution

Increased intra day volaility is a sign of distribution, when this volatility comes at the top of a rally. Now, distribution does not get complete in a day or two. It is a process rather than a single event. W will probably see sharp upswings as well as selloffs while market participants remain confused on the next move by the market.

As I write ths post, the U.S. markets are up, after a sharp selloff in the previous day. The Indian markets are liekly to see similar roller coaster movements.For short term traders, the strategy should be to buy during periods of despair and despondency (use technical analysis to determine the actual buy points) and sell when the impression seems to be that the rally will go on forever.

The focus seems to be shifting back to midcaps and small caps. This is all for the good, since mid caps are aavilable at relatively lower valuations when compared to the large caps.

4 comments:

Nawal Kamboj said...

Please add " Very Useful" in reactions

ANAS said...

Respected Sir, it me again..

are volatile markets, profitable for traders, who go for writing an option?
(i assume them to be profitable, )
REQUESTING YOU TO CORRECT ME IF I AM WRONG.


ALSO SIR, NSEINDIA & BSEINDIA both have launched MOBILE TRADING FACILITY. With that, we can access to our trading terminal, directly from our highend, GPRS enabled mobile handsets. (with direct streaming rates, net position, multiple market watch etc. )

WOULD YOU PLEASE DISCUSS, ON BLOOMBERG, whether, MOBILE TRADING IS A BENIFIT FOR THE MARKET/TRADERS , OR , JUST A LUXURY FOR THE TRADERS (no basic use, and adding to cost)...


THANK YOU FOR YOUR PRECIOUS TIME...

LIC Agent Noida said...

in such type of volatality where to put stop losses sir... evrything gets triggered.

kk said...

RESPECTED SIR
"BEING IN THE PRESENT" , IS ONE OF THE LESSONS, WHICH THE MARKET HAS TAUGHT ME.
AND THE PRESENT TELLS ME , I CAN STILL MAKE MONEY. MONEY FROM THE LAGGARDS.
MY DEFINITION OF DISTRIBUTION IS "WHEN THE MARKETS MOVES UP NOT BY THE LEADERS BUT BY THE LAGGARDS" . IT'S A SIGN OF DISTRIBUTION.
THURSDAY RALLY WAS PULLED UP BY BHARTI ,HUL, RELIANCE , CLEARLY NOT THE LEADERS.
MOREOVER NIFTY HAS JUST BROKEN OUT OF A DOWNWARD WEDGE, WHICH GIVES IT ATLEAST A TARGET OF 6260.
IN MY EYES , STILL ONE LAGGARD SECTOR IS LIFT - REALTY , ESPECIALLY UNITECH AND ANSAL PROPERTIES. MAY BE 10-20 % ON THE CARDS.
PLS CORRECT ME.
REGARDS.