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 

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.