Don't stop taking risk.......

Do not stop taking risk.......

Nifty continues to lead the world even after a small correction. Markets world over have become silent, neither up nor down. Though it seems no activity is going on, this is a situation where the traders have to give back their gains accumulated in the big runs we have in the earlier years. China & Japan are worth performing this week. Weekly charts have gone so tight that we have only seen such a pattern almost 10 years back in 2001-02. After that tightness, though markets bounced up to give one of history’s biggest bull markets. Will that repeat again? That much we cannot predict on the direction, but for sure, there is going to be a break out in either direction. Before that the present range will squeeze optimism and put trader’s beliefs to greater test.

When the markets are going in a sideways range, support / resistances tend to expand like rubber band, it becomes a fragile fencing, not a concrete one which, when broken will lead to a strong move on the side of the break out. So, traders need to be cautious. But, for that matter staying away from the markets is not a prudent decision either. Robin Sharma had quoted very recently, “When we stop taking risks, we stop living life.” When we stop taking trades in anticipation of a confirmation, by the time the confirmation is cleared, the best part of the move is over and we tend to get the last left over, which almost always is the damaging section for the trading accounts. So, if you are a serious trader, who treats trading as a business, trade the signals that your trading system gives you, your risk management methods will keep your accounts in good position.

Technology continues to be on vacation.

Technology sector has been in the receiving side since the beginning of this year. With every coming quarter, the leaders in this sector are outperforming their own lower performance numbers. Rankings for the top 4 frontline IT stocks are dwindling, while mid cap and small cap stocks take lead. Though there is some money to be made from their moves, investors have to be very cautious. When the leaders are struggling for quite a long time, the followers will have to succumb soon. Is the IT story folly over? Can’t wash off with such note, may be the uproar was pretty fast, but death is not possible so soon. This sector will join the other sectors to perform at par with the broad markets, no big returns likely from here at least for the near future.

FMCG and Pharma were the top performing industries this week. But, it is sad to note that none of the stocks in these two groups have a reason to take position in them, most of them are sideways trading into a broad range.

Domestic Fund managers closing off…..

It is a repetition of the regular pattern, about foreign funds stocking up their investments while our domestic fund managers liquidating their positions. This FII’s bought 1493.61 Crores worth of stocks while Domestic funds sold 2041.22 Crores worth of stocks. The question arises again about who is right when the markets are just pacing every day neither going high, nor low. If the markets breaks down from here, our fund managers are brilliant, where as if the opposite happens, we lose another good opportunity to take profits from our won companies. Maybe, this time if it happens so, we will learn a lesson of how to trade like smart guys.

Currencies have an opportunity for long trade.

USDINR has begun to trade sideways after a very strong bullish rally on the daily charts, while the weekly charts have very high bullish strength. This means, there is an opportunity staying in wait for traders to grab and profit from in the coming days. A close below 55.19 and an uptick from there is the right place to trade long for a target of 58 and above. Fridays drop is value has a good volume buildup in it, which indicates that the market is likely to go down in the first session of the coming week. Keep an eye on this counter, as not every time a bell rings about a beautiful opportunity. A market should show out from its chart asking us to take the trade, those are the trades that have your name etched on it. Take it, profit from it.

As there are not much activity in the markets now and with piling up whipsaw trades, it is testing time for the beliefs of traders now. But, nothing is going to remain the same always, there is a saying ‘thou shall pass’; similarly this situation of losses in the markets will also pass and bring in a big tide. All the money made from the markets are not for us to keep, we have to give back some of the gains. When we give it, if we are able to give it with love, we will for sure attract more when it is receiving time. So, take trades with discipline, keep risk management at highest priority, and wait for the next best opportunity.

That’s so much for the week gone by, as result season kicks off, though not with a big bang, there are sure to be some gems to be unearthed among the stock pile, we will keep our search on to find the stock with our name on it. Till then, Happy trading experience to our fellow traders.

Team BraViSa.