GREY MONDAY...?

FROM AN EXPERIENCE

Once you decide you’re going to participate in trading stock, you can't change your mind - you're in for the duration.

To operate effectively in any environment where you trading stock, you need rules and boundaries to guide your behavior. It’s a simple fact of trading stock, no matter what “system” you’ve developed, that the potential exists to do financial damage to ourselves — damage that can be greater than we think is possible.

There are many times when trading stock in which the risk of loss is unlimited. To prevent the possibility of exposing ourselves to damage, we need to create an internal structure in the form of specialized mental discipline and a perspective that guides our behavior so that we always act in our own best interests. This structure has to exist within each of us because the market doesn't provide it for us.

The markets provide structure in the form of behavior patterns that indicate when an opportunity of trading stock exists. But that's where the structure ends - with a simple indication. Otherwise, from each individual's perspective, there are no formalized rules to guide behavior.

Even gambling games have built-in structures that make them much different from trading stock – and a lot less dangerous. For example, if we decide to play blackjack, the first thing we have to do is decide how much we are going to wager or risk. This is a choice we are forced to make by the rules of the game. If we don't make the choice, we don't get to play.

When trading stock, no one (except yourself) is going to force you to decide in advance what your risk is. In fact, what we have is a limitless environment, where virtually anything can happen at any moment and only the consistent winners define their risk in advance of making on a trade. For everyone else, defining the risk in advance would force you to confront the reality that trading stock has a probable outcome, meaning that it could be a loser. Consistent losers do almost anything to avoid accepting the reality that, no matter how good a trade looks, it could lose.

Without the presence of an external structure forcing the typical person involved in trading stock to think otherwise, he is susceptible to any number of justifications, rationalizations, and the kind of distorted logic that will allow him to get into a trade believing that it can't lose… which makes determining the risk in advance irrelevant.

Once you decide you’re going to participate in trading stock, you can't change your mind — you're in for the duration. 

That's not true of trading stock. With trading stock, prices are in constant motion, nothing begins until you decide it should, it lasts as long as you want, and it doesn't end until you want it to be over. Regardless of what you may have planned or wanted to do, any number of psychological factors can come into play, causing you to be distracted, change your mind, or get scared or overconfident. In other words, you can behave in ways that are erratic and unintended.

Trading stock has no formal ending. The market will not take you out of a trade. Unless you have the appropriate mental approach to end a trade in a way that is always in your best interest, you can become a passive loser. Once you're trading stock and losing, you don't have to do anything to keep on losing. You don't even have to watch. You can just ignore the situation, and the market can take everything you own. One of the many contradictions of trading stock is that it offers a gift and a curse at the same time.

The gift is that, perhaps for the first time in our lives, we're in complete control of everything we do. The curse is that there are no external rules or boundaries to guide or structure our behavior. The unlimited characteristics of the trading environment require that we act with some degree of restraint and self-control, at least if we want to create consistent success when trading stock. The structure we need to guide our behavior has to originate in your mind, as a conscious decision that will guide your actions

                                                                                                                                                          (to be contd)

WHAT IS +VE & WHAT IS -VE

Positives:

1) Initial Jobless Claims total 374k, 11k less than expected and below 380k for the 1st time since mid May.

2) Within the June jobs report, avg workweek ticks up .1 and avg hourly earnings up 2.0% y/o/y, matching the best in 6 mo’s.

3) June vehicle sales total 14.05mm SAAR, a touch better than estimates of 13.9mm.

4) China cuts rates again. I include only them in the positives from a short term economic standpoint because they still have room to influence behavior thru policy.

5) China PMI services index rises to 56.7 from 55.2.

6) China’s PMI mfr’g index falls to 50.2 from 50.4 but was slightly above the est of 49.9.

7) India’s June PMI up slightly to 55 from 54.8

  Japan’s Q2 Tankan report at -1 better than expectations of -4.

9) Ireland is back!, at least for 3 mo’s as they sell short term bills for 1st time since Sept ’10.

Negatives:

1) US payrolls in June climb only 80k vs est of 100k bringing 3 month avg to 78k vs ytd avg of 150k and vs 153k avg in 2011.

2) ISM mfr’g falls below 50 for the 1st time since July ’09 at 49.7. New Orders and Exports within drop below 50.

3) ISM services index at 52.1 is the weakest since Jan ’10 and below est of 53. Export Orders fall below 50.

4) Notwithstanding a new low in mortgage rates, refi apps fall 8.4% to a 4 week low and purchase apps rise just .6%.

5) Spanish 10 yr yield round trips, back to near 7% level of last Thurs before EU summit results. Italian bonds come close and the German 2 yr yield closes below zero for 1st time.

6) Mfr’g PMI’s in Taiwan and South Korea fall below 50.

7) The BoE and ECB again spit in the wind hoping this time they won’t get wet

FUNDAMENTAL

Last Week’s Market Round Up: "Consolidation after last week’s rally"

Sensex closes at 17,500 flat; Nifty closes at 5,300, flat.

India manufacturing PMI for the month of June, came in at 55 versus 54.8 in the previous month, thus suggesting some uptick in manufacturing.

Globally, PMIs continued to languish with EU manufacturing PMI at 45 levels, while US manufacturing PMI coming in at 49.7 levels.

Globally, central banks in EU and China eased interest rates to boost growth by cutting their repo rates by 25bps and 31bps respectively.

Rupee ended flat against the US dollar, after rallying briefly for the earlier part of the week, ending at 55.6/dollar, versus 55.6/dollar last week.

MARKET OUTLOOK

"Expect short term rally to continue"

At the current level of 17,500, the Sensex trades at a PE of 15.7x FY12 earnings and 13.6x FY13E earnings estimate.

At 13.6x, we trade below average valuations of 15.4x 1 year forward earnings.

Recent events like Greek elections going in market’s favor having taken some risk off the table.

Further, crude oil prices have come off significantly by over 25% to $90/barrel, although have bounced back to $99/barrel this week.

With risks off the table, and crude coming off significantly we expect short term rally to continue.

SECTORAL OUTLOOK

"Stay with companies robust business models"

RBI in its latest policy cut interest rates by 50 bps to provide a fillip to deteriorating growth environment.

We expect pick-up in corporate capex and credit growth buoyed by further monetary easing.

We would advice clients to play interest rate sensitives like Banks and Capital Goods (Yes Bank, City Union Bank and Larsen and Toubro) to capitalize on falling rates theme.

At the same time consumption and agri stories (GSK Consumer, Bajaj Auto, Coromondal Fertiliser) would continue to do well.

We recommend reducing exposure on global cyclicals like Tata Steel as concerns from China slowdown intensify.

TECHNICAL

Round-up: "Range bound"

Nifty opened on a positive note and throughout the week was trading in a narrow range of 5330-5260. Finally Nifty closed at 5316 with a marginal gain of 0.74% on w-o-w basis. Pharma, Realty and Mid Cap stocks outperformed the broader markets on w-o-w basis.

Nifty Outlook: "Upside till 5450"

On the daily chart Nifty is continuously making Higher Top and Higher Bottom as well trading above the broke the mentioned reisaitnce of 5200. Beside this Nifty is still trading above the short term averages.

Oscillators still trading positive.

Above parameters clearly suggest strength in the markets and we maintain our upside target of 5378 and above that 5450.

In near term Nifty has support at 5265 and below that 5155.

An overall view of NIFTY FUTURES this month:

If (If & only if)NF happens to close above 5342 for 3 consecutive days, watch an unthinkable rally upto 5500-5600 within this July contract.

NEARBY RESISTANCES NOW @ 5342 – 5396 

& thereafter @ 5451

NEARBY SUPPORTS NOW @ 5285 – 5215 

(Supports valid till 5355 breaks anyday)

NIFTY FUTURE LEVELS FOR JULY 09

Day’s Resistance @ 5342-62-82-96

Day’s Supports   @ 5326-5309-5289

NF should trade above 5342 for 5 minutes,

for a hike upto 5363-82

Suppose if cuts and trades below 5326 for 5 minutes with

good volume see a slide upto 5309

Below 5309 for 5 minutes means watch more slide upto 5289

BUILD YOUR TRADING CONFIDENCE

1. Frequently visualize a successful trading process. What goes into good trading for you? Make sure you see the preparation required, the focus you have during the trading day, and the continuous learning from both winning and losing trades to keep getting more effective.

2. Increase your level of physical fitness, as this will enhance both your trading alertness and give a boost to your self-image simultaneously. Both of these elements make you a more confidence trader.

3. Make a list of your strengths. Review this list regularly to remind yourself of how successful you really are.

4. Eliminate negative thoughts and memories. When they occur, replace them with positive self-statements (for example, “I create my own luck” or “I have a good written plan of how I will execute my trades”).

5. Have a general strategy going into each trading day. When you prepare the day before, you position yourself to be proactive and gain confidence as you implement your plan. How aware are you of what you’re experiencing in your mind, body and soul at any moment?  You need to set up a monitoring system at the end of each trading day, to summarize what you executed according to your rules and what you did not.  Look for patterns in your behavior, that you can copy if they work for you, or minimize if they are costing you.

6. Create positive body language regardless of the gain or loss on that trading day. The way you act will often influence the way you feel for future trades. The more confident you feel, the more confidence you will show in your trading.

7. Improve on areas of weakness during preparation time and you’ll create more confidence and belief during the trading day.

Focus on one of these seven tips at a time, until you can build that area as a habit in your routine.  This will service to greatly improve your trading confidence over time.

TRADING PRINCIPLES

Sharpen Your Edge

“Gaining a competitive advantage is like having a two-edged sword, and you need to keep both of them sharp.  On edge is internal-knowing what unique skills you bring to the table.  The other is external and comes from gathering knowledge that makes it more likely you’ll succeed”

Keep Your Cool

“Deciding when to cut your losses is one of the toughest decisions for anyone to make, but traders at the top of their game know that they always have to make the decisions they need to make, which may or may not be the ones they want to make”

 Get Comfortable With Being Uncomfortable

“In the trading world, you will either make money or lose money on any given trade. All that matters in the end is making more money when you’re right than you lose when you’re wrong.  Knowing this, traders have learned to accept failure as part of the game, but they also use the information they acquire from their mistakes as a learning tool.  Frequently, what they learn from losing money is more valuable than what they learn when they make money”

3 TRADING COMMANDMENTS         

You Learn More From Your Enemies Than You Do From Your Friends:  

Make sure you take the criticism’s of others and use them to your advantage by recognizing that the more others criticize the more you value your own beliefs, trading or otherwise.

Be Careful Who You Get Into Bed With:

 Although not a trading rule per se, keeping good, solid company outside the charts, can help you be the best trader inside the charts.  “Trust and integrity between two people are the most important variables in life and in business”

Never Operate From a Position of Fear:

“If you are fearful in the markets, either as a result of taking a recent loss or some other mistake, or even as a result of being nervous about the level of risk you are taking, then you are putting yourself in the position of making and unclear and hence incorrect decision”

RED ALERT: MALICIOUS SOFTWARE SCAM OF 09.07.2012 

Internet blackout looms for thousands: What you need to know By Dylan Stableford, 

1 hr 52 mins ago (AP/File) Thousands of computer users may lose Internet access on Monday, when the deadline for a temporary fix to a malicious software scam shut down by the FBI last year expires. What is it? Millions of computers were infected with the so-called Internet Doomsday virus used in the hacking scam, which redirected Internet searches through DNS servers used by the scammers, who allegedly netted $14 million in bogus advertising revenue. After U.S. and Estonian authorities busted the malware ring last November, a federal judge ordered that the FBI use temporary servers while the malware victims' PCs were repaired. The temporary servers will shut down at 12:01 a.m. EDT on Monday, meaning anyone using a computer still infected with the virus will likely lose Internet access. Connectivity will be lost to the Internet PERIOD, Symantec, the online security firm, said in a blog post. If your computer is still using DNS entries that are pointing to the FBI servers on July 9, you will lose TOTAL access to the Internet. No connecting to the office from home, no updating Facebook, nothing until the DNS settings are fixed. How many computers have it? It's unclear how widespread the blackout will be. According to a working group set up by security experts, more than 300,000 computers remained infected as of June 11, including 69,000 in the United States. Last week, 245,000 computers were said to be still infected with the so-called Alureon virus, according online security firm Deteque, including 45,355 machines in the United States. Wired estimates 64,000 users in the United States and an additional 200,000 users outside the United States are still infected with the malware, despite repeated warnings in the news, e-mail messages sent by ISPs and alerts posted by Google and Facebook. According to Internet Identity, another IT security firm, 12 percent of all Fortune 500 companies and four percent of major U.S. federal agencies are still infected with DNSChanger malware. But it's unclear how many of those machines are still in use. What you can do According to Reuters, U.S. Internet providers including AT T and Time Warner Cable have made temporary arrangements so that their customers will be able to access the Internet using the address of the rogue DNS servers. And the problem, security experts say, is relatively easy to fix. It's a very easy one to fix, Gunter Ollmann, vice president of research for security company Damballa, told the news service. There are plenty of tools available. Online security firms, Facebook and the FBI are offering free diagnostic checks for users whose computers may be infected. Here are links to several: 

Malware check: http://dns-ok.us/  

FBI: https://forms.fbi.gov/

check-to-see-if-your-computer-is-using-rogue-DNSDNS Changer Working Group: http://www.dcwg.org/ 

Facebook: http://www.facebook.com/notes/facebook-security/notifying-dnschanger-victims/10150833689760766

McAfee: http://www.mcafee.com/

dnscheck Of course, that hasn't stopped local media outlets from breathless reporting on the looming blackout. Monday morning, Alabama's WAAY-TV reported, hundreds of thousands of Internet enthusiasts could wake up to find nothing but a dark, empty computer screen. The hype over a potential blackout threatens to obscure what has been a highly successful effort--one of few to date--to stamp out a global online scam and malware infestation, Paul Roberts wrote on Threatpost.com. Six people were arrested in Estonia and charged with Internet fraud in the sting. A seventh, who was living in Russia, remains at large.

DISCLAIMER 

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AWAIT AN OUT OF THE BLUE MOVES

FROM AN EXPERIENCE

39 RULES OF TRADING

RULE 1 – Keep losses small. I am more concerned about protecting my capital and ensuring any losses are small, than I am about making money. I’m going to have losses, but I control them and let the winners take care of themselves. The hardest job of any trader is to get out of a losing trade, believe it.

RULE 2 - Do not forget Rule 1.

RULE 3 - Learn the basics; fundamentals, charts and indicators etc.

RULE 4 - Position size every bet in relation to your bank.

RULE 5 - Always use stops, not as a trading tool, but as a disaster avoidance technique.

RULE 6 - Give your trade room to breathe, don’t place stops too close, most beginners lose because of this. Remember, the wider the stop the smaller the trade size. This is also dependent on the timeframe you are in, simple tip if you are trading on the 5 min. chart. Check the 10 min one as well. Stops should be placed visually in my opinion.

RULE 7 - Don’t be greedy, appreciate small and consistent gains. Once you’re in a profitable position, consider moving your stops – especially to break even – and then you are using the broker’s money. If your software has the facility, then trailing stops could the answer. 

RULE 8 - Accept that the markets are totally random and unpredictable and practice makes perfect – give yourself time before trading ‘live’.

RULE 9 - Control REVENGE, after a loser take a break, always. Never strike right back, never, and never double up to recover your losses.

RULE 10 - Never HOPE that you will win, trade only when you see a good trading opportunity, and remember live trading is different mentally from demo trading.

RULE 11 - Keep accurate records of each and every trade, winners and losers, even on a demo account, you must learn the correct habits.

RULE 12 - Eliminate fear, fear of failure and fear of trading. If you suffer from fear then trading is not for you.

RULE 13 - You do not have to trade, if there are no good trading opportunities then do not trade, there is always tomorrow. You can always spend the time practicing new techniques on a demo account.

RULE 14 - Take full responsibility 100% for your own trading – only you can win at trading, do not rely on any external crutch to blame.

RULE 15 - All markets are bearish, they will eventually reverse, prepare and profit from them.

RULE 16 - If you lose, bet smaller. If you win, bet bigger.

RULE 17 - Only bet with money you can afford to lose; this eliminates fear.

RULE 18 - Don’t buy or take tips. Don’t buy, listen to, or be influenced by outside sources. You are not a trader unless you learn to do it yourself; it’s so easy to blame others when things go wrong! 

RULE 19 - Don’t trade the news. As a beginner, if you try to prejudge the market’s reaction to the news, you will lose; don’t trade for 15 minutes either side of it. See how the markets react to the news and then trade.

RULE 20 - Have faith in your trades. Once you place a trade with stops, switch the computer off, they all have an “off” button, take the dog for a walk. Do not screen watch, it will scramble your brains.

RULE 21 - Learn and use effective money management; money management is the front door key to profitable trading.

RULE 22 - Always trade with the trend.

RULE 23 - Analyse your trading results, daily, weekly, monthly and annually.

RULE 24 - Be disciplined, stick to your Trading Plan, Targets, Position Sizing, Money Management, only YOU can enforce discipline on yourself – you had better learn to do it.

RULE 25 - Use multiple timeframes; keep the bigger picture in your head.

RULE 26 - Add to your winners. If you are on a winning trend, lock in some profits by moving your stop and increase your position size.

RULE 27 - Do not overtrade, it is the main reason that men go bald!

 RULE 28 - Learn to get out of a losing trade. It’s the hardest thing to master but, if you don’t, you will quickly join the ranks of the losers.

RULE 29 - Have a trading plan. It’s important, a must, essential, life saving, lifeline; you cannot win without one. Do not be fooled into thinking you can trade without one.

RULE 30 - Have an experienced mentor who you can turn to when things go wrong, or find yourself an experienced trading buddy. Do not expect to get a mentor for free.

RULE 31 - Do not – under any circumstances – let trading dominate your life. Take regular time out for family and friends, go and play football in the park or on the beach; it’s the real reason why you are trading. Think about it!

RULE 32 - Don’t blame yourself when things go wrong. Trades will go wrong – learn to accept them. Trading is a game of possibilities and probabilities – forget the last one – get the correct setup for the next one and have faith in your interpretation.

RULE 33 - Learn your own weaknesses, the best critic of yourself is you, concentrate in rectifying them. But first, you have to admit to them; and you will know.

RULE 34 - Aim for consistency. One of the keys of successful trading is to repeat good habits time and time again, boring but profitable.

RULE 35 - Take trading seriously. It’s not something that you can say ‘you’ll give it a try’ or ‘have a go’ at. It is a proper business, treat it as such, or it’ll be a case of goodbye loser!

RULE 36 - Understand the different styles of trading and practice each one for a while. Once you are happy with a style that suits you, practice it until you perfect it, it may be day trading, swing trading, scalping or longer term trading. They are all there for you, but ultimately you must decide.

RULE 37 - Don’t listen to hype, this industry is full of the biggest and best conmen in the business, if it sounds too good to be true, then stay clear and do not part with any money on dubious trading systems or advice. I’ve seen trading systems for $50,000 and more – quite simply they do not work. If they did, we would all have them. You can check out many conmen and crooked brokers at Forexpeace army on the internet.

RULE 38 - Keep accurate and honest records, I know I’ve said that before but I want you to do it. Good traders are good record keepers, poor traders are the opposite. And finally, enjoy trading! It is a life changer for those that can trade within these rules. If you want to add rules of your own to this list – feel free. The last rule of trading is

RULE 39 - Don’t forget rule number one.

                                                                                                                                                      (to be contd)

          

FUNDAMENTAL

This Week’s Market Round Up: "Stellar rally"

Sensex closes at 17,430, up 3.0%; Nifty closes at 5,278, up 3.0%.

The highlight of the week, has been Mr. Manmohan Singh taking charge of the finance portfolio and the ensuing talks of aggressively pushing through reforms.

Meanwhile as crude oil prices have come off, OMCs cut petrol prices by Rs.3/litre.

The Indian Meteorological Department (IMD) in its second stage forecast has retained its normal outlook for monsoon.

Rupee rallied against the US dollar, ending at 55.6/dollar, versus 57.2/dollar last week.

MARKET OUTLOOK

"Expect short term rally to continue"

At the current level of 17,300, the Sensex trades at a PE of 15.7x FY12 earnings and 13.6x FY13E earnings estimate.

At 13.6x, we trade below average valuations of 15.4x 1 year forward earnings.

Recent events like Greek elections going in market’s favor having taken some risk off the table.

Further, crude oil prices have come off significantly by over 25% to $90/barrel.

With risks off the table, and crude coming off significantly we expect short term rally to continue.

SECTORAL OUTLOOK

"Stay with companies robust business models"

RBI in its latest policy cut interest rates by 50 bps to provide a fillip to deteriorating growth environment.

We expect pick-up in corporate capex and credit growth buoyed by further monetary easing.

We would advice clients to play interest rate sensitives like Banks and Capital Goods (Yes Bank, City Union Bank and Larsen and Toubro) to capitalize on falling rates theme.

At the same time consumption and agri stories (GSK Consumer, Bajaj Auto, Coromondal Fertiliser) would continue to do well.

         

TECHNICAL 

Round-up: "Bulls took the lead"

Nifty opened on a flat note and throughout the week was trading in the broad range of 5200-5100. However on Friday huge buying was witnessed and Nifty broke the mentioned resistance of 5200 and further made a high of 5286.Finally Nifty closed at 5278 with a gain of 2.38% on w-o-w basis. Cements, Pharma, Realty, Cap Good and Banking stocks outperformed the broader markets on w-o-w basis.

WHAT TO THINK LIKELY TODAY..?

LEVELS OF NIFTY FUTURES (JULY 02)

OVERALL RESISTANCES NOW @ 5295-5342-5364

OVERALL SUPPORTS NOW @ 5245 – 5180 – 5100

Day’s Resistance @ 5295-5343

Day’s Supports   @ 5275-53-43

If NF trades above 5300 for 5 minutes, see an intraday hike upto 5323-42

Suppose if trades below 5299 for 5 minutes see a slide upto 5276 & 5254

FIIs PULLS OUT Rs1,957 cr FROM EQUITIES IN APR-JUNE

Amid concerns over economic growth and depreciating rupee, overseas investors pulled out Rs 1,957 crore from equities in April-June this year in contrast to a hefty Rs 44,000 crore investment in stocks in the previous quarter.

According to the data available with market regulator Sebi, foreign institutional investors (FIIs) have withdrawn a total of Rs 1,957 crore in April-June quarter of current fiscal. This was against record net inflows of Rs 43,951 crore in the January-March quarter.

In April-June period of 2011, FIIs investment in the equity market stood at Rs 5,171 crore.

Market experts attributed the outflow to a slew of reasons including depreciating rupee, slowing economic growth, high fiscal and current account deficit.

The country’s GDP growth had dropped to 9-year low of 6.5% in 2011-12. The growth in the January-March quarter was only 5.3%. The Index of Industrial Production) data showed just 0.1% growth in April.

Of the total withdrawal of Rs 1,957 crore in April-June, FIIs took out Rs 501 crore in June, Rs 347 crore in May and 1,109 crore in April.

In terms of debt, FIIs infused Rs 1,463 crore in the June quarter as against Rs 19,398 in the March quarter.

After taking the latest withdrawals into account, FIIs have made an investment of Rs 41,993 crore into the equity market so far this year and Rs 20,861 crore into the debt market during the same period.

The BSE 30-scrip barometer Sensex has gained 0.15% this April-June period to close at 17,430 points on June 29.

Although, the number of registered FIIs in the country were 1,758 at the end of June quarter as compared to 1,765 in March quarter. Besides, total number of sub-accounts stood at 6,336 in April-June period of 2012 as against 6,322 in the preceding quarter.

WORLD'S RISKIEST COUNTRIES TODAY

Russ Koesterich from iShares has cited David Wang as a creator of this list with the 15 riskiest countries in the world. Brazil is at 15th. We don’t understand how come Poland, Norway and South Korea are there while Portugal and Greece don’t even show up on the list.

Anyway, according to Russ, Wang based his conclusions on the following criteria: 

i) Countries exposed to the European sovereign debt crisis should be classified as higher risk; 

ii) Developed market countries with stable currencies during volatile periods should be classified as lower risk; 

iii) Emerging market countries with more cyclical sector exposure may be higher risk; 

iv) Emerging market countries with better fiscal and growth situations should be classified as lower risk.

Here’s his list of the top 15 riskiest countries today, i.e. the countries whose valuations are most sensitive to “risk-on” and “risk-off” sentiment shifts:

1) Hungary 2) Italy 3) Austria 4) Sweden 5)Poland 6) Finland

7) Spain 8) Germany 9) France 10) Russia 11) Norway 12) South Korea 13) Turkey 14) Netherlands 15) Brazil

DENNIS GARTMAN'S TRADING RULES

1. Never, Ever, Ever: Under Any Circumstance, Add to

a Losing Position… not ever, not never! Adding to losing positions is trading’s carcinogen; it is trading’s driving while intoxicated. It will lead to ruin. Count on it!

2. Trade Like a Wizened Mercenary Soldier: We

must fight on the winning side, not on the side we may believe to be correct economically.

3. Mental Capital Trumps Real Capital: Capital

comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.

4. This Is Not a Business of Buying Low and Selling

High; it is, however, a business of buying high and selling higher.

Strength tends to beget strength, and weakness, weakness.

5. In Bull Markets One Can Only Be Long or

Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.

6. “Markets Can Remain Illogical Far Longer Than You

or I Can Remain Solvent.” These are Keynes’ words, and illogic does often reign, despite what the academics would have us believe.

7. Buy Markets That Show the Greatest Strength; Sell

Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily.

When bullish we need to sail the strongest winds, for they carry the farthest.

8. Think Like a Fundamentalist; Trade Like a Simple

Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.

9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In “good times,” even errors turn to profits; in “bad times,” the most well-researched trade will go awry. This is the nature of trading; accept it and move on.

10. Keep Your Technical Systems Simple:

Complicated systems breed confusion; simplicity breeds elegance. The great traders we’ve known have the simplest methods of trading. There is a correlation here!

11. In Trading/Investing, An Understanding of Mass

Psychology Is Often More Important Than an Understanding of Economics: Simply put, “When they are cryin’, you should be buyin’! And when they are yellin’, you should be sellin’!”

12. Bear Market Corrections Are More Violent and Far

Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.

13. There Is Never Just One Cockroach: The

lesson of bad news on most stocks is that more shall follow… usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.

14. Be Patient with Winning Trades; Be Enormously

Impatient with Losing Trades: The older we get, the more small losses we take each year… and our profits grow accordingly.

15. Do More of That Which Is Working and Less of That

Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a “secret” to trading (and of life), this is it.

16. All Rules Are Meant To Be Broken…. but

only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.

DISCLAIMER 

THE RECOMMENDATIONS MADE HERE DO NOT CONSTITUTE AND OFFER TO SELL OF A SOLICITATION TO BUY ANY OF THE SECURITIES/COMMODITIES OF ANY OTHER INSTRUMENTS WHATSOEVER MENTIONED. NO REPRESENTATIONS CAN BE MADE THAT THE RECOMMENDATIONS CONTAINED WILL BE PROFITABLE OF THAT THEY WILL NOT RESULT IN LOSSES. READERS USING THE INFORMATION CONTAINED HEREIN ARE SOLELY RESPONSIBLE FOR THEIR ACTIONS. SURFING OR USING ‘tradersharmony.blogspot.com' DEEMS THAT THE SURFER ACCEPTS AND ACKNOWLEDGES THE DISCLAIMERS AND DISCLOSURES.THE INFORMATION PUBLISHED ARE FOR EDUCATIONAL AND INFORMATIVE PURPOSE ONLY AND THE USER/READERS SHOULD TAKE ADVICE OF HIS/HER ADVISER BEFORE TAKING ANY DECISION FOR BUYING, SELLING OR OTHERWISE DEALING WITH SECURITIES/COMMODITIES OR ANY OTHER INSTRUMENT WHATSOEVER.

A KEY MONDAY

FROM AN EXPERIENCE 

Paul Farrell observes that 95% of traders don’t make it. 80% of all day traders lose money. One study found active investors turn over their portfolios excessively (258% annually) but made less than 12% on their money. Passive buy-and-hold investors with only 2% portfolio turnover had significantly better returns.

And, most day traders suffer negative health consequences from their hyper active market moves.

To find out what your trading instincts mean — to grade your own Traders Psychological Profile — answer the following questions YES or NO:

Traders Psychological Profile

Y N You’ve tried more than one new investment strategy this year

Y N Feel you’re buying and selling funds at the wrong time

Y N Rarely open up to anybody for feedback about your losses

Y N Subscribe to two or more newsletters, feel overwhelmed

Y N Can count on one hand all the good laughs this week

Y N Have a lingering resentment about someone or something

Y N You love cable news, but need more time to trade

Y N Rarely break a sweat when exercising the past few weeks

Y N Wonder whether you bet too much on recent investments

Y N Need more than three caffeine and alcohol drinks a day

Y N Feel “something” keeps you from making more money

Y N Frequently don’t trust your instincts or your strategy

Y N You’ve had a major family or personal loss recently

Y N Believe losses are caused by the market manipulators

Y N You’re overweight and snack often on comfort food

Y N Fear your future trades may fail due to a losing streak

Y N Diet and sleep are disturbed by worries about money

Y N Your retirement portfolio’s not growing fast enough

Y N No vacation in a year, and lack an active social life

Y N Nothing (or everything) interferes with making money

Add up the number of Yes answers. Farrell notes that if your total number of “yes” answers is six or more, then day trading is too stressful and risky for you.The alternative to active trading is intelligent asset allocation. At the very least, he advises that you segregate your “untouchable” retirement money . . .

                                                                                                                                                                                         (to be contd)

FUNDAMENTAL

Last Week’s Market Round Up:

"Markets end a volatile week with meager gains "

Sensex ended the week at 16,972.51, partially up 0.13%, while the Nifty ended at 5,146.05 marginally higher by 0.14%.

The RBI’s stance to keep Repo Rates and CRR unchanged at 8% and 4.75% respectively reversed the buildup in expectations of investors by registering losses.

Greece elections saw leftists lose out to pro-austerity parties while the FOMC meet in the US failed to commit to an aggressive stimulus programme (QE3), while extending its Operational Twist to the end of 2012.

Disappointing Manufacturing PMI data for the US, Euro-zone and China could be an indication of a downturn in global growth.

Rupee soared to a life high 57.33 against the US dollar this week, versus 55.64/US dollar last week.

MARKET OUTLOOK

"Rupee depreciation to weigh on sentiments"

At the current level of 16,972.51, the Sensex trades at a PE of 15.3x FY12 earnings and 13.4x FY13E earnings estimate.

At 13.4x, we trade below average valuations of 15.4x one-year forward earnings.

Central banks in emerging markets are expected to support slowing growth through monetary easing, leading to a further fillip for growth and risk assets.

TECHNICAL

Round-up: "Range-bound session"

Nifty opened the week on a positive note and broke the mentioned resistance range of 5150-5180 and made a high of 5190. Thereafter throughout the week Nifty was trading in the range of 5150-5050. Finally Nifty closed at 5146 with a marginal gain of 0.14% on w-o-w basis. Cements, Pharma, Realty, Cap Good and Banking stocks outperformed the broader markets on w-o-w basis.

As mentioned in our previous report “On upside Nifty has resistance in the range of 5150-5180 and downside Nifty has support at 5000 levels, thus in the coming days breach of either side will lead to sharp upside or downside move”. On Monday Nifty opened on a positive note and breaches the mentioned resistance range of 5150-5180 and further made a new high of 5190.

Going forward for a day or two Nifty trades above 200DEMA as well as break its recent high of 5200 then we will witness further upside till 5378 and above that 5400.

However downside Nifty has support at 5050 which is the 21DEMA

NIFTY FUTURES - LEVELS TODAY (JUNE 25)

OVERALL RESISTANCES NOW @ 5195-5205-31-95-5342

OVERALL SUPPORTS NOW @ 5140 – 5090 – 5027 – 4976

Day’s Resistance @ 5158-95-5205-29

Day’s Supports   @ 5149-37-20

If trades above 5158 for 5-10 minutes a hike upto 5195

is very much possible

Above 5195 means see more hike upto 5229

Suppose if cuts & trades below 5149 for 15 minutes an intraday slide upto 5121 is possible

TRADING QUOTES

PLANNING, DISCIPLINE & PATIENCE

‘Predicting rain does n’t count; building arks does’: Warren Buffett’s Noah Rule.

“To know and not to do, is not yet to know” – Courtesy of Tom Witters.

‘It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one. What you got to have is faith and discipline when you’re not a winner.’ – Vince Lombardi

‘After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!’ – Jesse Livermore

FEAR

‘Never let fear of striking out, get in your way’: Babe Ruth.

PERSPECTIVES

‘It’s tough to make predictions, especially about the future,’ – Lawrence Peter ‘Yoggi’ Berra.

“go as far as you can see, and when you get there , you will see further.” -

anonymous

‘Don’t worry what others think… They don’t do it very often’ – Courtesy of Mark Carstens.

“A little learning is a dangerous thing, but we must take that risk because a little is as much as our biggest heads can hold.” – George Bernard Shaw.

“Those who cannot remember the past are condemned to repeat it” – George Santayana.

“Glory is fleeting but obscurity is eternal” – Napoleon

‘A long term investment is when I break even.’ – Courtesy of David Wong.

“There are many truths, but only one reality” – Courtesy of Robin Farrell.

‘It’s not whether you get knocked down, it’s whether you get up.’ – Vince Lombardi.

‘We would accomplish many more things if we did not think of them as impossible.’ – Vince Lombardi

“Vision – It reaches beyond the thing that is, into the conception of what can be. Imagination gives you the picture. Vision gives you the impulse to make the picture your own.” – Robert Collier.

“If you’re 30 minutes into the game and you don’t know who the patsy is, you’re the patsy.” – Courtesy of Saranjot Dosanjh.

‘Price is observable and objective while value is perceived and subjective’. – John Murphy.

‘In theory, there is no difference between theory and practice. In practice there is.’ – Yogi Berra.

“As a rule, Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works…. The Failure of great banks… and mercantile firms…are the symptoms incident to the disease, not the disease itself.” – John Stuart Mill (1867).

‘You need three bear markets to know what to do. The first nearly wipes you out, the second you learn how to survive and the third you take by the scruff of the neck and enjoy it.’ – Crispin Odey of Odey Asset Management.

“Never in recorded history, has the supply of capital not overwhelmed the supply of opportunity.” – Joseph Lassiter .

‘You only live once but if you work it right, once is enough’. – Joe E. Lewis.

“If you really know whats going on, you don’t even have to know whats going on to know whats going on… You can ignore the headlines because you anticipated them months ago” – Michael Steinhardt.

‘Another lesson I learned early is that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.’ – Jesse Livermore.

“Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited.” – Soros.

ON LOSSES (& PROFITS)

‘Tradings only real secret is… The best loser is the long-term winner’ – Phantom

“Trading is a losing game, the best loser is the long-term winner” – Anonymous.

‘Losses can either be lost money, or tuition in the school of trading’ – Courtesy of Mark Moskowitz.

‘The worst advice I use to get was. – ‘No one went broke taking a profit’’. – Courtesy of John Berra.

“It seems that the necessary thing to do is not to fear mistakes, to plunge in, to do the best that one can, hoping to learn enough from blunders to correct them eventually.” – Abraham Maslow

‘“Learn to like your losses”. Why? Because they are small!’ – Courtesy of Stuart A.Brown.

“One common adage…that is completely wrongheaded is: You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits.” – William Eckhardt.

“Its not about being right or wrong, rather, its about how much money you make when you’re right and how much you don’t lose when you’re wrong.” – George Soros.

“The first loss is the best loss.” – Jim Rogers.

“Losers average Losers”…Paul Tudor Jones.

“You learn nothing from your winners and everything from your losers.” – Courtesy of Jeff Horn.

·“To become a Master Trader, you must first be a successful loser.” – Jeff Horn.

EGO

“Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.” – Paul Tudor Jones

PERSONAL RESPONSIBILITY & SELF AWARENESS 

‘……you get the results you want. You produce your own success” – Gene Agatstein.

“I know from experience that nobody can give me a tip or series of tips that will make more money for me than my own judgement.” – Jesse Livermore.

‘There is no holy grail, and there is no magical system. You have to win the battle within you first before you can win with the markets” – Courtesy of Maria Psarra.

“If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.” – Marcus Aurelius.

“If you don’t know who you are, this is an expensive place to find out” – Adam Smith, The Money Game.

RELAX CORNER

ONE IS THE LONELIEST 

DISCLAIMER 

THE RECOMMENDATIONS MADE HERE DO NOT CONSTITUTE AND OFFER TO SELL OF A SOLICITATION TO BUY ANY OF THE SECURITIES/COMMODITIES OF ANY OTHER INSTRUMENTS WHATSOEVER MENTIONED. NO REPRESENTATIONS CAN BE MADE THAT THE RECOMMENDATIONS CONTAINED WILL BE PROFITABLE OF THAT THEY WILL NOT RESULT IN LOSSES. READERS USING THE INFORMATION CONTAINED HEREIN ARE SOLELY RESPONSIBLE FOR THEIR ACTIONS. SURFING OR USING ‘tradersharmony.blogspot.com' DEEMS THAT THE SURFER ACCEPTS AND ACKNOWLEDGES THE DISCLAIMERS AND DISCLOSURES.THE INFORMATION PUBLISHED ARE FOR EDUCATIONAL AND INFORMATIVE PURPOSE ONLY AND THE USER/READERS SHOULD TAKE ADVICE OF HIS/HER ADVISER BEFORE TAKING ANY DECISION FOR BUYING, SELLING OR OTHERWISE DEALING WITH SECURITIES/COMMODITIES OR ANY OTHER INSTRUMENT WHATSOEVER.

NORTH BOUND JOURNEY CONTINUES...?

FROM AN EXPERIENCE

“I always focus on the strongest stocks and buy them without hesitation-Stocks that are behaving properly are the only ones I focus my attention on”

“Overbought is a relative term used to keep the masses out of the trade”

“I’ll stay in the trade long enough to allow it to work or fail”“Volatility is a necessity to shake out the weak hands”

1. People usually expect the future to be like the past and underestimate the potential for change.

2. When everyone believes something is risky, their unwillingness to buy usually reduces its price to the point where it’s not risky at all. Broadly negative opinion can make it the least risky thing, since all optimism has been driven out of its price.

3. In investing, as in life, there are very few sure things. Values can evaporate, estimates can be wrong, circumstances can change and “sure things” can fail. However, there are two concepts we can hold to with confidence: • Rule number one: most things will prove to be cyclical. • Rule number two: some of the greatest opportunities for gain and loss come when other people forget rule number one.

4. Very early in my career, a veteran investor told me about the three stages of a bull market. Now I’ll share them with you. • The first, when a few forward-looking people begin to believe things will get better • The second, when most investors realize improvement is actually taking place • The third, when everyone concludes things will get better forever

5. Investors hold to their convictions as long as they can, but when the economic and psychological pressures become irresistible, they surrender and jump on the bandwagon.

6. Even when an excess does develop, it’s important to remember that “overpriced” is incredibly different from “going down tomorrow.” • Markets can be over- or underpriced and stay that way—or become more so—for years.

7. If everyone likes it, it’s probably because it has been doing well. Most people seem to think outstanding performance to date presages outstanding future performance. Actually, it’s more likely that outstanding performance to date has borrowed from the future and thus presages subpar performance from here on out.

8. Our goal isn’t to find good assets, but good buys. Thus, it’s not what you buy; it’s what you pay for it.

9. There are two kinds of people who lose money: those who know nothing and those who know everything.

10. One way to get to be right sometimes is to always be bullish or always be bearish; if you hold a fixed view long enough, you may be right sooner or later. And if you’re always an outlier, you’re likely to eventually be applauded for an extremely unconventional forecast that correctly foresaw what no one else did. But that doesn’t mean your forecasts are regularly of any value

11. Surprisingly good returns are often just the flip side of surprisingly bad returns. One year with a great return can overstate the manager’s skill and obscure the risk he or she took. Yet people are surprised when that great year is followed by a terrible year.

12. Psychological and technical factors can swamp fundamentals. In the long run, value creation and destruction are driven by fundamentals such as economic trends, companies’ earnings, demand for products and the skillfulness of managements. But in the short run, markets are highly responsive to investor psychology and the technical factors that influence the supply and demand for assets. In fact, I think confidence matters more than anything else in the short run. Anything can happen in this regard, with results that are both unpredictable and irrational.

                                                        (Excerpts from "THE MOST IMPORTANT THING" by HOWARD MARKS)

                     

                  

                                                                          

FUNDAMENTAL

Last Week’s Market Round Up: "Investor’s rate action conviction buoys markets"

Sensex closed out the week at 16,949.83, up 1.38%, while the Nifty ended at 5,068.35 up 1.39%

Markets were torrid for the initial part of the week as there was speculation that India may become the first BRIC nation with junk status on the back of a possible S&P downgrade.

IIP growth for April came in at 0.1%, lower than street expectations of 1.8%.

Headline inflation failed to slacken with WPI coming in at 7.55% in May as against 7.23% in April.

Rupee ended weak against the US dollar in the week, ending at 55.64/dollar versus 55.5/dollar last week.

MARKET OUTLOOK

"Multiple events over next week to determine direction"

At the current level of 16,949.83, the Sensex trades at a PE of 15.3x FY12 earnings and 13.4x FY13E earnings estimate.

At 13.4x, we trade below average valuations of 15.4x one-year forward earnings.

Central banks in emerging markets are expected to support slowing growth through monetary easing, leading to a further fillip for growth and risk assets.

The next week has multiple events lined up: Greek election results on the 17th, RBI meet on the 18th and FOMC meet on the 20th.

The fate of these events, the most important of the lot being the Greek election results, will drive near-term market direction.

Sectoral Outlook: "Stay with companies robust business models"

RBI in its latest policy cut interest rates by 50 bps to provide a fillip to deteriorating growth environment

We expect pick-up in corporate capex and credit growth buoyed by further monetary easing.

We would advice clients to play interest rate sensitives like Banks and Capital Goods (Yes Bank, City Union Bank and Larsen and Toubro) to capitalize on falling rates theme.

At the same time consumption and agri stories (GSK Consumer, Bajaj Auto, Coromondal Fertiliser) would continue to do well.

We recommend reducing exposure on global cyclicals like Tata Steel as concerns from China slowdown intensify.

TECHNICAL 

Round-up: "Northbound journey continues"

Nifty opened the week on a positive note and continued its upside journey and made a high of 5146. Finally Nifty closed at 5139 with a gain of 1.31% on w-o-w basis. IT, Cements, Realty, Cap Good and Banking stocks outperformed the broader markets on w-o-w basis.

Nifty Outlook: "Range bound"

As mentioned in our previous report "Nifty is looking strong and further upside can be witness till 5150 which is the 200DEMA and above that 5180 which is the double bottom target." As expected Nifty opened on a positive note and made a high of 5146 which was very near to our first mentioned target of 5150.

On the daily chart Nifty is trading above the short term averages as well as oscillators trading very neutral. Thus going forward we believe that Nifty is going to trade very rangebound. On upside Nifty has resistance in the range of 5150-5180 and downside Nifty has support at 5000 levels, thus in the coming days breach of either side will lead to sharp upside or downside move.

WHAT NEXT...?

LEVELS OF NIFTY FUTURES (JUNE 18)

OVERALL RESISTANCES NOW @ 5121-5195-5231-95-5342

Day’s Resistance @ 5166-85-5203

Day’s Supports   @ 5106-5088-71

GOOD RESISTANCE TODAY @ 5166 ON CARDS

If trades above 5160 for 10 minutes see a hike upto 5184

Suppose if trades below 5145 for 5 minutes see a slide 

upto 5125-5109

Below 5106 for 5 minutes means NF slides more upto 5090-72

PHARMA COS SELL DRUGS 10 TIMES COST:MCA

Leading pharma companies, including GlaxoSmithkline, Pfizer and Ranbaxy, sell commonly used drugs at a rate 10 times the cost of production, a study by the Corporate Affairs Ministry has found.

A study by the Cost Audit branch of the MCA found drugs like Calpol manufactured by Glaxosmithkline, Corex Cough Syrup by Pfizer, Revital by Ranbaxy Global, Omez by Dr Reddy’s Labs, Azithral by Alembic and several others were being sold at a mark up of up to 1,123 per cent over the cost of production.

Worried over the findings of the study, Corporate Affairs Minister M Veerappa Moily has written to the ministers of Chemical and Fertilizers M K Alagiri and Health Ghulam Nabi Azad seeking appropriate action on curbing this practice of pharma companies.

He has forwarded a copy of the study to the two ministers.

Emails sent to Ranbaxy, Pfizer, Zydus Cadila and Cipla remained unanswered while Dr Reddy’s Lab said it cannot comment on the findings of the MCA.

The MCA study covered medicines manufactured/marketed by Ranbaxy, Dr Reddy’s Lab, Wyeth, FDC, Alembic, Glaxomithkline, Pfizer, USV, ELder Pharma, Zydus Cadila, Wochardt and Cipla.

According to the ‘suo moto’ study, the mark up (MAPE) on cost of production range from 203 per cent to 1,123 per cent against 100 per cent allowed by the National Pharmaceutical Pricing Authority (NPPA) in case of scheduled drugs.

It said the profit margins were “exorbitantly high” even in cases of top selling brands like Amlodopine, metformin, ciprofloxacin and Azithromycin.

Also, cost of production differs significantly between manufacturers and there was significant variance in retail price between different brands of same high selling molecules.

“This practice of fixing maximum retail price (MRP) to exorbitant high (even 1,000 per cent of cost of production), gives a chance to the whole chain of distributors/whole sellers and retailers to dupe the unaware consumers. This is highly detrimental to the interest of the consumers forcing them to pay the MRP even 10 times of the cost of medicine they are procuring,” it said.

As per the findings that studied 21 formulations of big drug manufacturers, the mark up of maximum retail price (MRP) over cost of production (CoP) was the highest at 1,123 per

cent in case of GlaxoSmithkline for its Tab Zyloric, followed by Ranbaxy (858.09 per cent) for Cap revital, Zydus (752.85 per cent) for Cap Ocid, USV (746.47 per cent) for Gyclomet.

“In case of Zyolric Tab produced by GlaxoSmithkline, MAPE on COP is highest at 1123 per cent and in this the share in company’s profit margin is 640 per cent. As percentage of net sales realisation, it is 68 per cent,” said the study on

formulations (medicines) manufactured/marketed in India,” the study said.

It added, “Loading of selling and distribution expenses range from 34 per cent to a high of 209 per cent, highest loading of selling and distribution expenses is 209 per cent in case of Revital Caps produced by Ranbaxy Global.”

The report reavealed that in the 21 high MAT value brands there is very high company profit margin, very high mark up on cost of production, heavy loading of selling and distribution expenses and very high mark-up towards trade margins.

“Company’s profit margins as percentage of net sales realisation range from 29 per cent to a high of 68 per cent.

In 11 cases, the margin is more than 50 per cent,” it said. The study, which was carried out suo moto by the MCA, holds significance as the Government is working on a National Pharmaceutical Pricing Policy that aims at controlling the price of drugs, particularly the essential ones.

The price of 60 per cent of the medicines can be brought under control if a ministerial panel on pharmaceutical policy, headed by Agriculture Minister Sharad Pawar accepts the Pharmaceuticals department’s proposal.

INDIAN ECONOMY IS IN STAGFLATION:Moody's

Global financial services firm Moody’s today said Indian economy is facing stagflation, where growth is slow and inflation high, and cautioned that the Reserve Bank cannot be too aggressive in cutting interest rates.

“India’s economy is in stagflation, with notably weaker growth but inflation still stubbornly high,” said Glenn Levine, Senior Economist, Moody’s Analytics.

Amid wholesale price-based inflation ticking up to 7.5 per cent year-on-year in May due to supply-side factors, the agency said it will cause further “headaches” at the RBI.

“Yet with the inflation numbers now being driven by supply-side factors, and with the currency being pushed downwards…and India’s weaker growth prospects, we think that the RBI could cut rates without it putting too much upward pressure on inflation,” said Moody’s Analytics.

However, it said the Reserve Bank of India (RBI) cannot be “too aggressive” while inflation remains a problem.

The RBI is scheduled to review mid-quarter monetary policy on June 18.

Moody’s said the recent plunge in the rupee is pushing up the price, especially imported of goods and commodities priced in US dollar.

It further said with the rupee now sitting 15 per cent below its peak of late-February, this will ensure that WPI inflation remains in the 7 per cent to 8 per cent range for another six months.

“Indeed, with the growth side of the economy slowing, the risks have shifted sharply towards growth and they (the RBI and other policy makers) should just grin and bear the higher inflation numbers,” it added.

Stagflation is a situation when economic growth of a country stagnates while inflation is rising.

Moody’s Analytics is a part of Moody’s Corp that provides expertise in economic and consumer credit analysis, credit research and risk measurement, among others.

TRADING IN THE ZONE

These Beliefs are the Seven Principles of Consistency from Mark Douglas’s “Trading in the Zone”

I highly recommend picking this book up to add to your collection, because it has benefited me tremendously in understand how beliefs and values play a vital role in one’s trading and ultimate success.

I remember the first time I picked this book up I didn’t “get” it and put it away. About a year later I read it again and it just clicked. I now reference it on a weekly schedule just so the principles in the book stay fresh in my mind and to reinforce what I had learned.

I am a Consistent Winner Because:

1.  I objectively identify my edges.

2.  I predefine the risk in every trade.

3.  I completely accept the risk or I am willing to let go of the trade.

4.  I act on my edges without reservation or hesitation.

5.  I pay myself as the market makes money available to me.

6.  I continually monitor my susceptibility for making errors.

7.  I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them.

Five Fundamental Truths:

1. Anything can happen.

2. You don’t need to know what is going to happen next.

3. There is a random distribution between wins and losses for any given set of variables that define an edge.

4. An edge is nothing more than an indication of a higher probability of one thing happening over another.

5. Every moment in the market is unique.

 “Consistency is the result of a carefree, objective state of mind, where we are making ourselves available to perceive — and act upon- when the market is offering us in any given moment.”

~Mark Douglas

If anybody out there is having difficulty perceiving opportunity in today’s markets then they need to read this book. I know this environment is unprecedented and extremely challenging, but in every market there is opportunity. I just read a great quote very relevant to today’s market, but I’m not sure where it came from.

“Fear blinds us to opportunity: greed blinds us to danger.”

DISCLAIMER 

 THE RECOMMENDATIONS MADE HERE DO NOT CONSTITUTE AND OFFER TO SELL OF A SOLICITATION TO BUY ANY OF THE SECURITIES/COMMODITIES OF ANY OTHER INSTRUMENTS WHATSOEVER MENTIONED. NO REPRESENTATIONS CAN BE MADE THAT THE RECOMMENDATIONS CONTAINED WILL BE PROFITABLE OF THAT THEY WILL NOT RESULT IN LOSSES. READERS USING THE INFORMATION CONTAINED HEREIN ARE SOLELY RESPONSIBLE FOR THEIR ACTIONS. SURFING OR USING ‘tradersharmony.blogspot.com' DEEMS THAT THE SURFER ACCEPTS AND ACKNOWLEDGES THE DISCLAIMERS AND DISCLOSURES.THE INFORMATION PUBLISHED ARE FOR EDUCATIONAL AND INFORMATIVE PURPOSE ONLY AND THE USER/READERS SHOULD TAKE ADVICE OF HIS/HER ADVISER BEFORE TAKING ANY DECISION FOR BUYING, SELLING OR OTHERWISE DEALING WITH SECURITIES/COMMODITIES OR ANY OTHER INSTRUMENT WHATSOEVER.