A PERCEPTIVE MONDAY

FROM AN EXPERIENCE

“Successful traders always follow the line of least resistance. Follow the trend. The trend is your friend.”

A prudent speculator never argues with the tape. Markets are never wrong– opinions often are.

Few people succeed in the market because they have no patience. They have a strong desire to get rich quickly.

“I absolutely believe that price movement patterns are being repeated. They are recurring patterns that appear over and over, with slight variations. This is because markets are driven by humans — and human nature never changes.”

When you make a trade, “you should have a clear target where to sell if the market moves against you. And you must obey your rules! Never sustain a loss of more than 10% of your capital. Losses are twice as expensive to make up. I always established a stop before making a trade.”

“I am fully aware that of the millions of people who speculate in the markets, few people spend full time involved in the art of speculation. Yet, as far as I’m concerned it is a full-time job — perhaps even more than a job. Perhaps it is a vocation, where many are called but few are singled out for success.”

“The big money is made by the sittin’ and the waitin’ — not the thinking. Wait until all the factors are in your favor before making the trade.”

Right…Now let’s take a look of four important points:

* Risk Management - If you lose 10% of your trading account, you need to make 11.1% on the remaining capital to get back to even. If you lose 20% of your account, you need to make 25% on the remaining capital to return to breakeven. At a 30% loss, you have to make 37.5% to become whole; at 40% loss, you have to make 67% to return to even. Once you’ve lost half your trading capital, you need to double the remainder to replenish your account. Much of trading success is limiting losses and avoiding those fat tails of risk.

* What is a Trader? - If you ask a trader what is a good market, he will tell you that it’s a market that has good volatility; a good market is one that moves. If you ask an investor what is a good market, he will tell you that it’s a rising market. Lots of people try to succeed as traders with the mindset of investors. It doesn’t work.

* Refutation - The story goes that Samuel Johnson, upon hearing Bishop Berkeley’s theory that objects existed in mind only, kicked a rock in front of him, announcing, “Thus I refute Berkeley!” The incident came to mind when I met with a trader today who trades very actively every day, has made money on more than 80% of days this year, and has made several million dollars this year. His performance was clearly documented by his firm and the firm’s risk manager. Thus he refutes efficient market theory.

* Success - When I see traders like the one above (quite a few at his firm are up more than a million dollars this year), it’s an inspiring reminder that success *is* possible to those who work diligently at trading as a career. The support of a superior firm doesn’t hurt, either.

                                                                                                                               (to be contd)

FUNDAMENTAL

Last Week’s Market Round Up: Q1FY13 GDP growth disappoints...

Sensex closes at 17,380, down 2.4%; Nifty closes at 5,260, down 2.4%.

Metal counters were broadly beaten down between 10% to 20% on concerns over potentially adverse impacts on the back of CAG report on coal mining.

As of 22nd August 2012, the country’s monsoon deficit has narrowed to 14% of the Long Period Average (LPA) as rainfall for the last three weeks has been pretty strong.

Q1FY13 GDP came in at 5.5% versus our expectations of 5.7%, as industry and agriculture disappointed on the growth front.

Rupee ended flat against the US dollar, at 55.5/dollar, down 0.2%.

MARKET OUTLOOK

Maintain positive stance...

At the current level of 17,500, the Sensex trades at a PE of 15.5x FY12 earnings and 13.2x FY13E earnings estimate.

At 13.2x, we trade below average valuations of 15.4x 1 year forward earnings.

Despite several expectations, the government is yet to move on any kind of reform / policy action, we still remain hopeful though.

SECTORAL OUTLOOK

Stay with companies robust business models...

RBI in its latest policy kept rates unchanged as it was concerned about rising inflation

GDP growth has weakened to 5.3% in Q4FY12, while IIP growth for the last 6 months has averaged 1.3%

We advice investors to play quality interest rate sensitives like Banks and Capital Goods (Yes Bank, City Union Bank and Larsen and Toubro)

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: Bears took the lead...

Nifty opened the weak on a negative note and was unable to break the resistance 5400. Throughout the weak Nifty face lot of selling pressure and broke the support of 5340. Nifty further continued its southbound journey and made a low of 5238 .Finally closed at 5258 with a loss of 2.43% W-o-W.

Nifty Outlook: Support at 5193(200 DEMA)

Nifty opened the weak on a negative note and broke the mentioned support of 5340 and made a low of 5238. On the daily chart Nifty is also trading below the neckline of Inverse head and Shoulder pattern.

Beside this Nifty is continuously trading below the 5340 as well as below 21DEMA. Nifty continued to formed lower bottom. Thus going forward Nifty is looking weak and we can see further downside till 5193 which is the 200DEMA.

In near term if Nifty starts trading below 5193 levels on the closing basis then we will witness further sharp downside in the markets. However on higher level nifty has strong resistance in the range of 5300-5340.

NIFTY FUTURES LEVELS - SEP 03

NEARBY RESISTANCE NOW @ 5408

NEARBY SUPPORT NOW @ 5270

Day’s Resistance @ 5305-32

Day’s Supports   @ 5270-40

Above 5277 NF touches 5303

If & only if NF cuts & trades above 5303 for 5 minutes with good volume see an intraday hike upto 5330

Suppose if cuts & trades below 5270 with volume see a slide upto 5240

SELL TIPS (PURE & SURE INTRADAY)

As usual we keep silence in free posts regarding the time and price of the intraday trades for the scrips given below

ABIRLANUVO

BPCL

NBVENTURES

RELINFRA

HEROMOTOCO

INFY

IGL

JOIN HANDS WITH US & ENJOY EVERYDAY IN STOCK MARKET

GLODYNE TECHNO NEEDS SEBI INQUIRY..?

WHO HAS PUT THE LOWER CIRCUIT FOR 25 TRADING SESSIONS...?

JIM ROGERS IN RUSSIAN MARKET FOR THE FIRST TIME

After 18 long years of negotiations, Russia has finally joined the World Trade Organization (WTO), marking a major stride forward in the nation’s continued effort to grow its presence in international affairs and on the global economic stage. Russia is now the 156th member of the WTO and many might find it surprising it is also the last G-20 member to join the global free-trade group. This noteworthy development comes at a time when neighboring Euro zone member nations are plagued with debt, while growth prospects at home remain clouded with uncertainty, thus presenting a lucrative opportunity for those with a stomach for risk and a long-term investment horizon [see also Euro Free Europe ETFdb Portfolio].

Despite belonging to the BRIC, Russia has been flying under investors’ radars for months now as looming European debt drama has chipped away at investors’ confidence when it comes to dipping their toes in the region; given its geographic proximity and tangential exposure to the currency bloc, uncertainties over Russia’s economic outlook have likely been exaggerated.

The nation’s ascension into the WTO has undoubtedly brought back the spotlight onto this often overlooked emerging market. European Union Trade Commissioner Karel De Gucht commented on the newly added WTO member stating, “It will facilitate investment and trade, help to accelerate the modernization of the Russian economy and offer plenty of business opportunities for both Russian and European companies” [see also 25 Ways To Invest In Natural Gas].

Rogers Looks To Russia

According to the World Bank, Russia’s entry into the WTO will add about $162 billion each year to economic output in the long run by improving market access. Although the nation is still faced with rampant corruption and numerous inefficiencies relative to developed market standards, this recent stride towards trade liberalization, coupled with President Putin’s commitment to opening up the gates to foreign investors, has inspired legendary investor Jim Rogers to change his tune [see also Commodity Guru ETFdb Portfolio].

Wall Street veteran Jim Rogers, perhaps best known for his success in the commodity market, has long been a skeptic of Russia since the breakup of the Soviet Union. However, Rogers recently made an appearance on CNBC stating, “I’m starting, to my own astonishment, to question my own views on Russia and looking more favorably on Russia. I am not an investor there yet, but I am starting to consider it for the first time in my life.” As one of the world’s largest energy exporters, this economy boasts tremendous potential especially now that Russian companies will have an opportunity to attract more capital and compete more fervently in the global market. Its recent acceptance into the WTO and Putin’s vow to deliver annual economic growth of 6% undoubtedly puts Russia on the radar screen for many now, including investment guru Jim Rogers himself.

Ways To Play

Bullish investors with a stomach for risk have several options when it comes to tapping into Russia’s lucrative equity market:

Van Eck Market Vectors Russia ETF (RSX): This is by far the biggest and most popular ETF which delivers exposure to Russia. RSX is a favorite among day-traders and long-term investors alike, boasting nearly $1.8 billion in assets under management along with an average daily trading volume topping four million shares.

Van Eck Market Vectors Russia Small-Cap ETF (RSXJ): This is the small cap counterpart to RSX, offering more of a “pure play” on the local economy.

iShares MSCI Russia Capped Index Fund (ERUS): This fund has accumulated $153 million in assets under management since launching in late 2010; similar to the other ETFs on this list, ERUS is dominated by giant and large-cap securities from the energy sector.

SPDR S&P Russia ETF (RBL): Cost-conscious investors will have a hard time passing up this ETF, as it offers by far the cheapest exposure to Russian markets, charging 0.59% in annual expense fees.

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.