BEAR THIS BEAR WEEK DEAR BULLS

FROM AN EXPERIENCE 

-Good day traders have analytic minds and are able conduct quick calculations and think on their feet, they must be able to identify trends and patterns without relying on a fancy chart or computer program.

-All successful day traders are confident, they are decisive, able to think quickly and have no time for uncertainty or self-doubt as this is what often leads to missing some of the best trading opportunities of the day.

-Self belief goes hand in hand with confidence, you have to believe in your decisions and run with them. If you are indecisive perhaps day trading is not be a suitable career for you. 

-All successful day traders need discipline, once you have a plan stick to it. When day trading you can lose money as well as make money, as losses can result in an end to your career you need to manage your risks, know where to set your limits and stop loss orders accordingly. Once you have met your objectives do what you planned don’t let greed or fear take control of you.

Trading across multiple-time frames must be one of the hardest things to do as a trader. Many I know have chosen to avoid this completely while others wait patiently until all time frames correlate with their general read, which sometimes can take weeks if not months depending on the various time frames in question.

—Some struggle with the volatility of the tape, while others struggle with a psychological bias. At present I am struggling with the different pictures on different time frames. Currently I have trades on both sides of this argument taking index shorts against the weekly pattern while playing daily longs as they setup. The net gain has been a whole bunch of nothing which is making me ask the question if the different trades are worth it or if it would have been better to simply wait for one picture to resolve itself and correlate with the other. In hindsight this certainly sounds like it would have been the smarter play.

—Patience is never fun but until we have some solid resolution I still believe it to be the best play.

There’s that ‘P’ word again…

                                                                                                                                                              (to be contd)

WHAT HAPPENNED LAST WEEK..?

Since the contract expiry of MAY (of Nifty Futures) closed below 9 Days Exponential Moving Average, our subscribers are advised to enter into 4800PE of June and short Nifty Futures @ 4885 on Friday –

On the very same session it slides 70 pts leading Nifty Futures to 4815, giving a profit of Rs3500/LOT

Picture it for a greater quantity (10-20 LOTS)

The profit mentioned here excludes the gain in Individual scrips done intraday.

That’s why we proudly proclaim this blog and our news as your free ATM

Subscribe us to know more and enjoy the whole benefit each and every day with us in Indian stock Market

What next...?
LEVELS OF NIFTY FUTURES (JUNE 04)
Day’s Resistance @ 4864-75
Day’s Supports   @ 4803-4774

If sustains below 4827 for 5 minutes see a slide upto 4803-4774

FINAL SUPPORT @ 4774

Suppose if trades above 4828 for 15 minutes with good volume,

see a hike upto 4852-75 

ENJOY THE FOLLOWING TIPS TOO TODAY 

INTRADAY SELLING TIPS TODAY (JUNE 04)

Sell SUNTV @ 227.60; T – 218.20

Sell MARUTI @ 1082; T – 1046

Sell ADANIENT @ 243.50; T – 236.65

Sell RECLTD @ 162.40; T – 158.15

Sell SIEMENS @ 648; T – 630.75

Sell EDUCOMP @ 135.50; T – 130.10

FUNDAMENTAL

Last Week’s Market Round Up: "Markets end weak"

Sensex closes at 15,965, down 1.5%; Nifty closes at 4,840, down 1.7%

 Q4FY12 GDP grew by 5.3% as against consensus estimates of 6.1%. The pace of growth has slowed down considerably where we have recorded the lowest figures in quarterly GDP growth since March 2003, when GDP grew by 3.6%

Manufacturing PMI numbers for the month of May for India came in at 54.8 versus 54.9 in April.

Meanwhile, manufacturing PMIs across Europe and China were weak, Eurozone PMI coming in at 45.1 and China PMI at 50.4

Rupee ended flat against US dollar in the week at previous week’s level of Rs. 55.5/dollar.

MARKET OUTLOOK

"Euro fears may dampen sentiment in near term"

At the current level of 15,965, the Sensex trades at a PE of 14.7x FY12E earnings estimate and 12.8x FY13E earnings estimate.

At 12.8x, we trade below average valuations of 15.4x 1 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.

As a market stance, we maintain our long bias given expected recovery in corporate capex, stabilization of downgrade cycle in corporate earnings, and attractive valuations of 12.8x FY13E on the Sensex.

We recommend being less aggressive than earlier and expect some consolidation in markets in the near term as flows run dry. We recommend accumulating stocks with strong and robust business models in this phase.

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: "Market Gives Up after Expiry"

Nifty started the week with positive note crossed our mentioned resistance of 4955 buy didn’t manage to sustain at higher level and corrected sharply from higher level. It was expiry week with 200 points swing on weekly basis. Power, IT and FMCG were major gainer while Capital Goods, Automobiles, Real Estate and Metal was major looser. Nifty ended the week with loss of ~2% W-o-W.

Nifty Outlook: "Sell off Below 4780"

We mentioned in our previous report that "Nifty had formed Hammer candle stick pattern on the weekly chart and thus going forward if this pattern is confirmed with Nifty trading above 4955 than rally till 4976 and 5034 can be witnessed". Nifty achieved our 1st mentioned target and fall short of our second target with making high of 5020.

 As Nifty continued to form lower tops and lower bottoms as well as trading below the short term averages we retain our view that the overall trend is weak and bounce back should be used as an exit opportunity from the long positions.

 Going forward, If Nifty starts trading below 4780 than sell could accelerate and Nifty may test 4700 and below that 4650

 On Upside short term resistance is placed at 4960 (20 DEMA) and above that 5030

GREAT INVESTOR cum TRADER QUOTES

Warren Buffett (Net Worth $39 Billion) – “‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

George Soros (Net Worth $22 Billion) - ”I’m only rich because I know when I’m wrong…I basically have survived by recognizing my mistakes.”

David Rubenstein (Net Worth $2.8 Billion) – “Persist – don’t take no for an answer. If you’re happy to sit at your desk and not take any risk, you’ll be sitting at your desk for the next 20 years.”

Ray Dalio (Net Worth $6.5 Billion) – “More than anything else, what differentiates people who live up to their potential from those who don’t is a willingness to look at themselves and others objectively.”

Eddie Lampert (Net Worth $3 Billion) – “This idea of anticipation is key to investing and to business generally. You can’t wait for an opportunity to become obvious. You have to think, “Here’s what other people and companies have done under certain circumstances. Now, under these new circumstances, how is this management likely to behave?”

T. Boone Pickens (Net Worth $1.4 Billion) - “The older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.”

Charlie Munger (Net Worth $1 Billion) – “If you took our top fifteen decisions out, we’d have a pretty average record. It wasn’t hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor.”

David Tepper (Net Worth $5 Billion) – “This company looks cheap, that company looks cheap, but the overall economy could completely screw it up. The key is to wait. Sometimes the hardest thing to do is to do nothing.”

Benjamin Graham  – “The individual investor should act consistently as an investor and not as a speculator. This means that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money’s worth for his purchase.”

Louis Bacon (Net Worth $1.4 Billion) – “As a speculator you must embrace disorder and chaos.”

Paul Tudor Jones (Net Worth $3.2 Billion) - “Were you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your butt. After a while size means nothing. It gets back to whether you’re making 100% rate of return on $10,000 or $100 million dollars. It doesn’t make any difference.”

Bruce Kovner (Net Worth $4.3 Billion) - ” My experience with novice traders is that they trade three to five times too big. They are taking 5 to 10 percent risks on a trade when they should be taking 1 to 2 percent risks. The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.”

Rene Rivkin (Net Worth $346 Million) - “When buying shares, ask yourself, would you buy the whole company?”

Peter Lynch (Net Worth $352 Million) – “I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.”

John Templeton (Net Worth $20 Billion)- “The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell.”

John (Jack) Bogle (Net Worth $4 Billion) - “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.”

CANNOT ARREST PLUNGING RUPEE IF 'FUNDAMENTALS' WEAK - RBI  

The Reserve Bank of India (RBI) cannot arrest the rupee’s decline if it is caused by weak fundamentals or global factors but can only take more calibrated steps in the forex market in such a scenario, top official said today.

“If the rupee fall is due to fundamental weakness of the economy, or due to global factors, then the RBI cannot support it,” RBI Deputy Governor K C Chakrabarty told reporters on the sidelines of an HR summit of the state-run banks here.

The government must address trade deficit issues if the fall of the rupee is due to weak fundamentals, he added.

“If the rupee is depreciating due to real sector issues, financial sector measures will not solve it,” Chakrabarty said.

The rupee has been losing value against all the major currencies, especially the American dollar, since April and hit an all-time low of 56.52 yesterday. It has shed nearly 24 per cent year-to-date.

As a measure to contain dollar demand and help support the rupee, Chakrabarty also hinted at opening a separate window for oil companies.

“The option (of opening a separate dollar window for oil companies) is open. Whether they (RBI) is doing it or not, I don’t know, because it will not be done in the public view,” he said.

As the rupee loses ground almost everyday against the US dollar, with the hands of RBI are tied in view of depleting forex reserves, there have been talks of directly selling dollars to oil companies — the biggest consumers of the greenback — by opening a separate window for them.

The move can take off the demand pressure from the open market for the dollar.

Oil has been the biggest component of the country’s import bill for decades. In FY’12, out of the total import bill of USD 488.6 billion, as much as USD 155.6 billion was on account of oil as India meets 70 per cent of its fossil fuel needs through imports.

This has widened the current account deficit to over 4 per cent last fiscal, as against 2.6 per cent in 2010-11.

Also, fiscal deficit shot up last fiscal hitting 5.76 per cent of the GDP, from a projection 4.6 per cent.

Economists have been blaming these factors for the plight of the rupee, apart from fall in investments, which came down to 30 per cent in FY’12 from 38 per cent in FY’08.

Without referring to the forthcoming mid-quarter review of the monetary policy slated for June 18, the RBI Deputy Governor said, “If inflation comes down then interest rate will also come down.”

On the highly disappointing GDP numbers, he said it does not matter if it is 6.5 or 7 per cent, if we take corrective measures. Unless we work hard, GDP will fall further.”

According to the GDP data released yesterday, India’s growth rate during 2011-12 slipped to 6.5 per per cent from 8.4 per cent in the preceding two financial years.

Even during the 2008-09, the year when the country was facing the impact of the global financial meltdown, growth rate was higher at 6.7 per cent.

ARE YOU IN STRESS WHILE TRADING? – HERE’s THE SOLUTION

1. Think positively. Being optimistic helps in stressful situations. Do not let stress affect your mind and keep focusing on the positive side of your trading. What we think may result in decisions that can lead to better or worst situations. Thinking positively helps in making good decisions.

2. Change your response to stress. Being able to manage stress means developing strategies to deal with stress. Think of stress as a reaction rather than an event. It makes it easier to identify healthier ways to manage stress. Learn to Reframe Your Brain when adrenaline kicks in as the result of a win or a loss.

3. Task division. No man is an island. As a human being, we cannot survive being on our own. Having a trading mentor or trading buddy can provide both a sounding board and a support system.

4. Manage your time. Time is such that once you lost it, you can never get it back. Managing and limiting your trading time will help to keep your emotions and trading on track.

5. Learn your priorities. Our behavior towards ourselves and others may also contribute towards stress. Sometimes it is important to say no towards requests that you find it hard to meet. Keep in mind that by saying ‘yes’ to everything may please everyone but you may add on more stress and cause disappointment if the target is not meet.

6. Look away from your charts to take a break. Learn to calm mind and reduce stress while trading. By mastering Your Traders Journey and performing the brain reset function will get you back in the zone when you feel stressed.

7. Always be cool. Remember that stress is normal. However, it is important to keep your cool. Focus on the situation to gain control and don’t give up. Try your best to remedy the situation. An easy way to remain cool and distributing your load it to use four A’s of managing stress: avoid, alter, adapt, or accept.

8. Strong social network. Having a strong support from family, friends, peers or colleagues is important to help you through the stress. This is something that you can cultivate when you are not under stress and helps you to feel that there is someone who will be there if you need them. Try getting together for dinner, calling your parents/long lost buddies, chatting with colleagues or having coffee to help reduce stress while helping to build a bond with people around you.

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