Technical view by Nooresh

Wait for confirmatory moves in next 6-8 sessions.

Sensex Technical View :
Yet again markets have reacted from the upper end of the triangle. Although the triangle seemed to be broken the confirmatory moves did not come. Now Sensex is coming close to the lower end of the triangle.
The extreme short term trendline comes to around 9500 and other comes closer to 9300.
The recent most low comes around 9162.
So we again need to watch the zone of 9300-9500 and see whether index gives a reversal from the zones or not.
A 3-4 session closing move below 9200 would mean a breakdown on downside and open up gates to 8300/7700 or lower also technically.
Similarly a move beyond 10500 gives a target of 10900/11650 +.
In the next couple of weeks we might see a move which tries to break on either side. So be prepared to react then to try predicting in a volatile environment.
Stocks to watchout for :
As index is near lower zones discussing large caps and their levels. Lot many stocks have come closer to recent trendline supports. Need to watch recent lows corresponding to 9162 Sensex.
The support for Reliance comes around 1155-1140 zone in near term if sustains below it can drop to 1020-1050. The major probs would be seen below 1020 only.
RCOM support is around 196 /184 . Sustaining below 184 would mean big trouble.
LnT important support around 720-740 zone.
The above two words are more important for a trader then any other. Generally every trader tends to talk about trades,technical points , mechanical systems and every thing else that revolves around Stocks and prices. But lets look at some some of my favorite sentences .
A traders job is not to trade BUT TRADE WELL.
Its not necessary to trade every day.
If you are not in the market all you can lose is an opportunity.
Some on risk management
"How you trade is more important than what you trade."
Risk management is the difference between a successful trader and a sucker.
Preserving capital is more important then profits.
The reason for writing above sentences is to emphasize the importance of discipline and risk management is because it is generally the least focussed topic amongst traders. Majority of the times traders are looking for technical tools , tips and everything else whereas the real key to successful trading is in the two words.
Avoiding leverage has been our motto always and have consistently mentioned it. Those who followed this discipline were able to see through Jan, March , October crashes and still be in business.
Another important thing is stoplosses, booking partial profits, reducing risk and being on cash on regular intervals was the motto since March onwards ( 16k breakdown ).
The next important words for Jan-March-May would be generate capital through trading , Stoplosses and trailing stops will be better as rides will be bigger , be opportunistic rather then bearish or bullish , be nimble-footed, Plan your investments , Be ready to invest with a price target as well as risk apetite.
As a matter of fact the Satyam fiasco has made me mention this topic as lot many readers would be able to relate with it.
We had a buy call on Satyam on basis of a calculation on Balance has suddenly gone wrong coz of the shocking revelations by Mr Raju ( will discuss some other time on it ).
Suddenly all the analysis is totally wrong as the assumption the cash is true.
But the end result is the stock moved from 115 -120 to 175-185. We were out of the majority portion by 170 and rest on trailing of 165 or many might have moved out early. This was due to the disciplined trading and risk management ( staggered selling on rise frm 155 to 175 to reduce exposure ) .
Out here lets sum it up.
1) Buying reason was medium term with a price target rather then fundamental time period.
2) Balance Sheet analysis looked fine but IT fundas we dint like.
3) Based on assumption that balance sheet is true. Every fundamental analysis is based on this FACT.
4) Technically the stock was never a buy but that was never the basis of the trade.
The above points dont matter as assumptions and the reasons went wrong in the medium term.
But the end result of the trade gain of 20-50 %. REASON--- DISCIPLINE AND RISK MANAGEMENT.
Next view was to avoid the stock after the RAJU report.
1) The reason to buy was Balance sheet which ceased to exist.
2) Technically it was never a buy but actually a sell when it broke down.
So whether to term this trade of ours to be lucky or result of discipline is a different perspective. But all i can say is even if we may go wrong in our reasons but our discipline may definitely try to save us from going bankrupt!
LAUNCH OF WEBSITE :I have just completed creating a beta version of the site --- which would be updated with blogs , views , data,info etc on regular basis. There is a forum,chatroom, shoutbox and much more would be added soon and slowly.
Readers can create their accounts. They will receive a mail with a one time login. Change your password.Readers can send in their suggestions also to the site to other interested people.
Best Regards,

Article by Nooresh Merani

Nooresh has written 2532 articles.

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