GOLD - REVIEW

Gold given above 9610 has made a high of 9950 in just 3 trading days. Hold it for 10300 revising stop loss to 9750. There could be a consolidation at that level and there after could be 10700-11200. A reversal from 10300 could rest at 10000-9800.

GOLD

Buy GOLD MINI if it closes above 9620. It would break the trend line and initiate a fresh rally towards 9700-9900. At those levels we are review and take decision to exit or hold further. Keep stop loss at 9550 on closing basis.

Stocks Review

Sobha made a high of 1020 and still moving, Tata Motors if closes above 810 can make new highs, Tech Mahindra made 1452 and can still move even tough Infosys results are weak.

Watch out for Infosys post results. If 1975 is broken it can fall, but reversals can lead to 2450 in short term.

TATA MOTORS call initiated

Tata Motors sustained well above 760 and made an intraday high of 822 and closed near 805. Hold for 905-965 increasing stop loss along with the price rise. If it sustains above 965 it may make a new high crossing 1050.

TATA MOTORS

Price 755
Buy for 785-840-905-965
Action: Buy if closes above 760.

Tech Mahindra - Revise Entry

Tech Mahindra was recommended above a close of 1366. Revise entry point to close above 1358 holding the same targets. Click here to view the old post

Sobha 1st target done

Sobha makes a high of 909.90 meeting the first target. Book 30% now and Hold rest for second target of 940-950.

Sobha Developers

Sobha Developers sustained well above averages of 840 and has attractive target of 910-940. A good opportunity to enter at current levels of 850 keeping stoploss of 835 on closing basis for a good short term run.

CCL Products Ltd

CCL Products Ltd.

Price: 307

Target: 327 – 370

Stop Loss below 296

CCL Products has recovered well from its low of 270. Buy for short term target of 327 and 370. Close above 312 would also lead to short term averages crossing over long term. Buy with stop loss below 296.

Tech Mahindra

TECH MAHINDRA

Price: 1350

Target 1440 and 1560

Action: Buy if closes above 1366

Tech Mahindra closed at 1350 which is above its three months average of 1347. It is also close to its resistance line. On break of 1360 and close above 1366, Tech Mahindra would be initiating a fresh rally and can be held for targets of 1440-1560.

DLF Ltd.

SCRIPT: DLF LTD.

PRICE: 635

TARGET: 680-740-774

DLF Ltd has closed above averages with volumes showing good sign of accumulation in the range of 620-640. Crossing the resistance line above 640 and close above 645 would initiate a new rally. DLF could be purchased for immediate short term target of 680 and 740 and 774 keeping stop loss at 630 on closing basis.

Incase DLF breaks the support line and closes below 620 it would enter a bearish phase. Traders can go short below 615 for 590.

Hindustan Zinc

Hindustan Zinc has seen a good accumulation in the short term. Close above 725 would be a good opportunity to enter for targets of 810 - 840 keep stop loss at 700. 750 would be a resistance level to watch out. Above that would be a smoot rally upto 840 and higher.

Reliance Communications

Reliance communications has been moving in a strong positive uptrend as indicated by the two parallel red lines. It has strong support near 510 which should be used to for long term buying or on a break of the blue short term trend line indicated by the arrow which is a level above 564. Close below 504 would be a signal to exit and go short. If purchased above 564 keep stop loss at 552. Target 640 and 710.

Shasun, Aegis and others

Shasun and Aegis which was recommended a few days back have been going stable. Shasun saw a high on 109 and is not stable at 104. Aegis picked up well recently going steady at 164 given at 150. Hold both the stocks but exit shasun below 101 and re-enter on dips for long term.
Market would be stable over all if it closes above 4555 of a day or two. But buying should be limited and with stoploss.

PSYCHOLOGY OF TRADING COMMODITY FUTURES AND FOREX.

1. Do You Want to Fight?"
2. Technical Traders Should Still Examine Fundamentals
3. Commitments of Traders: What are the Big Boys Up To?
4. Using Contrary Opinion in Trading Markets
5. Entry & Exit Strategies
6. A Favorite Trading "Set-Up"
7. Trading Options on Futures
8. Determining Support & Resistance Levels on Charts
9. Spend "Quality Time" Studying Trading and Markets


1. Do You Want to Fight?"

"Fighting the Tape" (trend) in markets. Think about it: Do traders really want to fight the market? Remember, only the markets are ALWAYS right. No one else.
Traders many times think like consumer shoppers think: "I need to buy at bargain-basement prices to get the very best deal."Unfortunately, when trading futures markets (or stocks), thinking like a consumer shopper is unwise and unprofitable. I think one of the major mistakes most traders make is trying to "bargain hunt" and go long a market (or a stock) that he or she perceives as being "low-priced."
The same is true for trying to sell (go short) a market at perceived high prices. Crude oil is a good example here. All this year, the trading landscape has been littered with the carcasses of traders trying to pick a top in crude oil. These top-pickers have so far been brutalized by the market--which is always right.
Don't fight the tape. If the general market trend is one way, do not trade against it. In my "Top 10" trading rules list, rule No.1 is: Are the daily, weekly and monthly charts all in agreement on trend? If I'm thinking about position-trading a market and the aforementioned charts are not in agreement on trend, I'll likely pass on the trade. And I certainly won't initiate a position trade that is against the overall trends shown on the charts.
Some traders may prudently ask, "What about "contrary opinion" trading and the Commitments of Traders (COT) reports showing commercials buying in downtrends? Well, I cannot argue that contrary thinking and trading is valid and is employed successfully by some traders. I have used contrary thinking and trading, myself. But I think that type of trading method is an exception and not the rule, regarding becoming a successful trader. Also, commercial traders (the big boys in the business) most times seem to be on the right side of the market. However, we as individual traders do not have the resources (research staff, worldwide connections, very deep pockets, etc.) that the commercials enjoy.
Also, when good market trends get underway, even though trend traders don't "catch the bottom" (or the top), there is usually plenty of distance for the market to run to allow good profits to accrue.

2. Technical Traders Should Still Examine Fundamentals

I base the vast majority of my trading decisions on technical indicators and chart analysis--and also on market psychology. However, I do not ignore certain fundamentals that could impact the markets I'm trading. Neither should you.
In this feature I'd like to share with you the types of fundamentals in various markets about which technically oriented traders should be aware. While this article will be most beneficial to beginning and intermediate traders, the experienced traders may enjoy it as a "refresher."
I've told many times that I have been very fortunate in my career in the futures industry. In the beginning of my trading days, I was forced to learn about the fundamentals impacting all the markets I covered. (At one time or another, I covered every futures market traded in the U.S., and also many overseas futures markets.) I had to talk to traders and analysts every day, regarding the fundamentals that impacted the particular market on which I was reporting.
Realizing very few get that kind of unique opportunity to learn about market fundamentals, what can beginning to intermediate traders do to "get up to speed" regarding the fundamentals of the markets they wish to trade?
Here are some useful nuggets to consider regarding market fundamentals:
· You should know in what increments your market trades, the contract size, if it's physically deliverable, cash settled or both, and when first-notice day and last trading day occur. You don't have to become an expert on deliveries or notices, but you should be aware of the concepts. Reading about what the exchanges have to say about their markets is a great way to start out learning fundamentals.
· The Internet is indeed a wonderful tool to help you learn about futures market fundamentals--for free. Use your favorite search engine and do a search on your market of interest. However, make sure you use "futures" in the search words, as this will narrow the focus of the search engine.
· Here's a caveat on market fundamentals: The professional traders anticipate them and many times factor the fundamentals into price even before they occur. In fact, this happens quite often in futures markets. For example, it stands to reason that crude oil demand will increase in late fall and winter, and that crude oil futures prices should rise in that timeframe, as opposed to summertime prices. A novice trader may think it's a no-brainer to go long the December crude oil contract in September. However, keep in mind all the professional traders and commercial traders know this, and they have likely already factored this seasonal fundamental into the price of the December contract.
· There are U.S. government economic reports that sometimes have a significant impact on markets. Associations also release reports that impact futures markets. Even private analysts' estimates can move markets. Try to learn about the reports or estimates that have the potential to impact the market you wish to trade. You should make it a priority to know, in advance, the release of any scheduled report or forecast that has the potential to move your market. For example, if you are thinking about establishing a position in the FOREX market and the U.S. employment report is due out the next day, you may want to wait until the report is released before entering your position. The employment report can whipsaw the forex market in the minutes after it's released, which could stop you out of your position.
· If you trade commodities like cotton, coffee or cocoa, it's a little more difficult to find fundamental news sources for free.
You may want to subscribe to a news service like Bridge, where specialized reporters scour the world for news that impacts those markets. The U.S. Department of Agriculture has a website with reports on many commodities that trade in futures markets, including not only the major U.S. row crops, but also markets like coffee and orange juice.
Finally, traders should consider the knowledge of market fundamentals as just one more tool in their trading toolbox. The more tools in a trader's toolbox, the higher the odds he or she will be a successful trader.

3. Commitments of Traders: What are the Big Boys Up To?

Examining the Commitments of Traders (C.O.T.) report, issued by the Commodity Futures Trading Commission (CFTC).
The C.O.T. report is released bi-weekly--every other Friday afternoon. There is also a C.O.T. report issued on the following Mondays that includes futures and options data. However, this report is not as closely followed as the Friday afternoon report that covers only futures, because the combined futures and options report has less history.
The CFTC requires futures traders and hedgers who hold market positions larger than the CFTC's required reporting levels to report their positions on a daily basis. This is how the C.O.T. report is derived.
The C.O.T. report breaks down by open interest large trader positions into "Commercial" and "Non-Commercial" categories. Commercial traders are required to register for which futures are used as a hedge. The Non-Commercial category is comprised of large speculators--namely the commodity funds. The balance of open interest is qualified under the "Non-reportable" classification that includes both small commercial hedgers and small speculators.
What is most important for the individual trader to examine in the reports is the actual positions of the categories of traders--specifically the net position changes from the prior report. To derive the net trader position for each category, subtract the short contracts from the long contracts. A positive result indicates a net-long position (more longs than shorts). A negative result indicates a net-short position (more shorts than longs).
Now, if I've got many of you lost at this point, DON'T WORRY. I've got some suggestions later on that allow you to look at some examples of reports on other websites. What I'm trying to do at this point is familiarize you with the general basis of the report, related terminology and how traders use the C.O.T. report.
The most important aspect of the C.O.T. report for most traders is the change in net positions of the commercial hedgers. Why? Because studies show that commercials hold a superior record to other trading groups in forecasting significant market moves. The large commercials are generally believed to have the best fundamental supply and demand information on their markets, and thus position their trades accordingly. Along with the advantage of having the best fundamental supply and demand information on their markets, large commercials also trade large size, which in itself moves markets in their favor. It's important here to note that whether a particular trader group is net long or net short is not important to analyzing the C.O.T. report. For example, commercials in silver are the producers and they have never been net long, because they hedge their sales. In gold, however, the commercial mix is more heavily weighted toward fabricators who buy long contracts as a hedge against future inventory needs. So, again you need to look at the net change in positions from the previous report or several of the recent reports.
Individual traders that consider positioning themselves on the same side of the market as large commercials, when the large commercials become one-sided in their market view, is the best way to utilize the C.O.T. report.
Some traders do like to take the opposite sides of the trades on which the small trader in the C.O.T. reports are shown taking. This is because most small speculative traders of futures markets are usually under-capitalized and/or on the wrong side of the market.
Also, some traders will also follow the coat-tails of the large speculators, thinking the large specs must be good traders or they would not be in the large trader category.
Contrary to what some believe, divergences from seasonal open interest averages in C.O.T. report data are not reliable trading indicators. This is even true with agricultural markets, where one would suspect that hedging is a seasonal consideration.

4. Using Contrary Opinion in Trading Markets

One of the best methods to trade a market is to jump on board when prices "break out" of a congestion or "basing" area on the charts and begin a new trend. One of the most risky and least successful trading methods is trying to pick tops and bottoms in markets. Contrary opinion in the trading business is defined as going (trading) against the popular or most widely held opinions in the marketplace. This notion of "going against the grain" of popular market opinion is difficult to undertake, especially when there is a steady drumbeat of fundamental information that seems to corroborate the popular opinion.
To help you understand why contrarian thinking is used successfully by some traders, consider these questions: When is a market most bullish? When is a market most bearish? The answers are: A market is most bullish when the highest daily high on the chart is scored--it's downhill for prices from there. A market is most bearish when the lowest low is reached on the chart, and then the market turns up.
It's no wonder many novice traders lose their assets quickly in the futures trading arena. Traders are most bullish at market tops and most bearish at market bottoms!
Since nobody has discovered the Holy Grail of trading markets, the best traders can do is seek out clues, through chart and technical analysis, and possibly do some contrary thinking.
If you've read books on trading markets, most will tell you to have a trading plan and stick with it throughout the trade. A main reason for this trading tenet is to keep you from being swayed or influenced by the opinions of others while you are in the middle of a trade. Popular opinion is many times not the right opinion when it comes to market direction.
I'll give you an actual example of how contrarian thinking and trading can be successful. The year was 2002, the last big drought year in the Midwest that saw corn and soybean prices skyrocket. It was July that saw corn and bean prices trade sharply higher, based on ideas the hot and dry weather would continue in the Corn Belt. Then, after the close, the National Weather Service issued its 6-10 day forecast that, sure enough, called for more hot and dry weather for the Corn Belt. Bulls confidently headed home for the weekend. Even "local" traders on the Chicago Board of Trade floor went home long--something most never do, especially over a weekend.
Well, come Monday morning, the updated weather forecasts had changed a bit, but more importantly, trader psychology had changed immensely. The drought and resulting poor yields had all been factored into the market with prior price gains, culminating with Friday's big push higher. Corn and bean markets traded limit down on Monday and recorded very sharp losses for around three days in a row.
I know of one trader who used contrary opinion thinking and sold on SOYBEAN that Friday that prices were pushing higher. He made a good deal of money that next week. But isn't that top-picking? Yes, technically it is. Contrarian trading is not for everyone, but some traders are successful in employing it.


5. Entry & Exit Strategies

It is always questioned how to best determine entry and exit strategies when trading markets. Here are just a few of their quotes:
· "Though my success rate has been high, I am only breaking even financially, due to getting out too early in profit and letting my losses run too far."
· "Many articles are written showing when and where to enter trades... but how many articles are written about "running" positions? Where to exit surely has to be the biggest key to trading success!"
· "I would appreciate some advice or tips on how to and when to enter a market and when to exit."
Of course, if a trader knew exactly when to get into a market and when to get out, wouldn't trading be easy! But even the most successful traders in the world can't do that. The best they can strive for is to catch a bigger part of any move (trend) in the market, and then get out with a good profit before the market turns against them.
I've always emphasize trading with the trend and not against it, on the perils of trying to pick tops and bottoms, on support and resistance, and on letting profits run and cutting losses short, as well as trading the "breakouts." I won't repeat all those trading tenets here. In this article, I'll get more specific on entries and exits, and what to do if you are in a trade and are accumulating profits or absorbing losses.
First of all, if you are in a trade, you should already have a general plan of action in place, including potential entry and exit points, before you entered the trade. Certainly, you can alter your plan of action in the heat of battle, but you should not enter any trade without having a well-thought-out trading plan. Also in your trading plan you can have a few scenarios that could occur and what you would do if they did occur.
Entry and exits points in trades most times should be based on some type of support or resistance levels in a market. For example, in the metal markets at present, many traders think prices are close to a top. But I won't go short in a metal contract just because I think it's close to a top. I need to see some weakness in the market. I will wait for the contract to pull down through a support level and begin a fledgling down trend. Then, if I do go short, I'll set my buy stop just above a resistance level that's not too far above the market. And if the trend does not develop and the market turns back north, I'm stopped out for a loss that's not too painful.
Another way to enter a market that is trending (preferably just beginning to trend) is to wait for a minor pullback in an uptrend or an upside correction in a downtrend. Markets don't go straight up or straight down, and there are minor corrections in a trend that offer good entry points. The key is to try to determine if it is indeed just a correction and not the end of the trend.
On when to get out of a market when you're losing money, I have a simple, yet very effective answer: Upon entering the trade, if you place a sell stop below the market if you're long (buy stop if you're short), you know right away how much money you will lose in any given trade. You should never trade without employing stops. Thus, you should never be in a trade and have a losing position and not know where your exit point is going to be. I prefer setting tighter stops because I'm not rich and want to survive financially to trade another day. Yes, I'll get stopped out sometimes and then right away the market will turn in the direction I had planned. However, by setting tighter stops, I will not be in a position whereby I lose substantial money because I'm fighting the market, "hoping" it will soon turn in my favor.
What about when you've got a winner going and good profits already in place? This is the time to employ "trailing stops." For example, if you're long a market and it reaches your initial upside objective, but now you really think there may be more upside and you don't want to exit your trade. You put in a sell stop at a certain level below the market that allows you to stay in the winning trade. But if the market turns south you are stopped out and still have a decent profit.
I can't tell traders exactly at what percentage below the market (above the market if they are short) they should set stops or trailing stops, because all markets are different at different times, and traders have different views on how much money they can stand to lose. However, a general rule of thumb is to place stops and trailing stops just below a support level that's not too far below the market. (If you're short, place the buy stops not too far above the market.




6. A Favorite Trading "Set-Up"

"Without giving away any precious secrets, could you tell me a way to improve my entries and exits (on trades)? It seems nobody wants to share their system."
Well, first of all, I don't have any trading "secrets." What I do have is many years of market experience, including studying the markets and technical analysis--and listening carefully to the best and brightest traders share their philosophies on successful trading. (You should be suspicious if anyone tries to tell you they do have a "secret" to trading success, but that's another story.)
On better entering and exiting trades, first of all you need a trading plan--before you enter the trade--and you need to stick to it. Your trading plan can have different scenarios and options once you're into the trade, but the key here is don't "fly by the seat of your pants" when you're into a trade. You don't want to let emotions dictate your strategies while you're actively trading a market.
Know how much money you can stand to lose and then place a stop accordingly, and then don't change your mind when you're in the middle of the trade.
If you've got a winner going, you should also have a plan in place regarding when to take your profits. Again, your trading plan can allow for some flexibility once you are in the trade.
More specifically, I like to "buy into strength" and "sell into weakness." This trading method abides by the old trading adage, "The trend is your friend." Conversely, traders who try to "fight the tape" and be a bottom-picker or top-picker usually wind up getting their fingers burned.
One of my favorite trading "set-ups" is when prices have been in a trading range--between key support and resistance levels--for an extended period of time (the longer, the better). Then if the price "breaks out" of the range (above the key resistance or below the key support), I like to enter the market--long on an upside breakout or short on a downside breakout. A safer method would be to make sure there is follow-through strength or weakness the next trading session--in order to avoid a false breakout. The trade-off there is that you could be missing out on some of the price move by waiting an extra trading session.
If you are long the market, set your sell stop just below a technical support level that's within your tolerance for a drawdown. If you're short, set your buy stop just above a technical resistance level that's within your tolerance for a drawdown. Don't set your stops right at support or resistance levels, because there's a decent chance that those levels will check and possibly reverse the price move--and you'll miss getting stopped out.
If you've got a winner and decide to let your profits run (per your initial trading plan), use trailing stops that utilize technical support and resistance levels.

7. Trading Options on Futures

A while back, I was asked by the fellow traders if they should short the crude oil market because of its lofty price levels. I responded that I don't give specific trading recommendations, but I certainly do want to help my fellow traders succeed at the difficult task of trading futures markets. Given the sharp runup in crude at the time, and the rising volatility of the grain futures during that same timeframe, it was a good time to discuss trading options on futures--specifically buying puts and calls. You can also sell options, but your financial risk is not limited like it is when you buy an option. I won't get into selling options in this feature.
I know that many beginning (and even veteran) traders think options trading is too complicated, and they don't have a clue about the vega, theta, delta and gamma pricing formulas--or the strangles, straddles, butterflies and other such options trading methods. Well, don't worry. I'm not going to get into those complex strategies in this column.
Entire books have been written on options and options trading strategies, but I will only focus on basic low-risk and limited-risk trading strategies for beginning traders (and veterans, too). I'll also talk about using options to "hedge" winning trading positions in volatile markets. I do suggest that if you are interested in trading options, you should read a book or two on options trading. Again, you don't have to be a rocket scientist to employ simple options trading strategies.
First, I am going to assume readers know the definition of an option on a futures contract, and also the difference between a put option and a call option and "in the money" and "out of the money." Back to the big runup in crude oil recently. It certainly is tempting to want to short that market at present levels. However, remember that to successfully trade futures you not only have to be right on market direction, you also have to be correct on the timing of the market move. Furthermore, you can be right on market direction and very close to being right on timing the trade, but still lose your trading assets because of market volatility. In crude oil, for example, a trader could establish a short position two days before the top in the market is in, and still be stopped out and lose his trading assets because of the high volatility.
Purchasing options allows you to limit your financial risk and let's you ride out volatile market swings without the worry of increased margin calls.
Buying a put or call that is out-of-the money is a good, inexpensive way to wade into futures trading. The money the trader lays out to his broker for the option purchase is all the trader has to worry about losing. No margin money. No margin calls. He can sleep well at night. And he is still trading futures, learning the business, honing his trading skills.
Here's another trading tactic to think about regarding purchasing options in volatile markets. Just because you have a buy or sell stop in place, that does not guarantee you will get out of the market (filled) close to your stop. For example, weather markets in the grains and soybean complex futures often produce limit price moves--sometimes for two or more sessions in a row. If you have a straight trading position on in soybeans and the market moves against you by the limit, or multiple limits, your protective stop is virtually worthless. But if you had hedged your straight futures position with a cheap out-of-the-money option purchase, you have limited risk in a volatile market. Let's say you are long soybeans at $5.00 in a very volatile market. You may initiate that trade on the long side, but then purchase a $4.50 put option that limits your trading risk to 50 cents a bushel ($2,500 per contract). The trade-off here is that you are gaining peace of mind and losing some profit potential. But for many, that's well worth it. You can stay in the game to trade again another day, and not get wiped out by a limit price move.

8. Determining Support & Resistance Levels on Charts

In this educational feature, I'm going to tackle an issue about which several of my readers have inquired: How to determine support and resistance areas on the charts.
My favorite method (and I believe this the most accurate method) of determining support and resistance levels is to look at a bar chart and its past price history and then see at what price levels the highs, lows and closes seem to be touching the most. This method of determining support and resistance levels works on any bar chart timeframe--hourly, daily, weekly or monthly. Many times a bunch of highs or lows will be concentrated in a small price area, but not at one specific price. If that's the case, I will determine that area to be a support or resistance "zone." The one thing I will point out with determining support and resistance zones is that you don't want your zone to be so wide that it's virtually useless from a trading standpoint.
Major price tops and bottoms in markets are also major resistance and support levels. Unfilled price gaps on charts also qualify as very good support and resistance levels. Trendline support and resistance is also very useful to the trader. Projecting these trendlines to determine future support and resistance areas is extremely effective.
It's important to note that when a key support level or zone is penetrated on the downside, that level or zone will likely become key resistance. Likewise, a key resistance level or zone that is penetrated on the upside will then likely become a key support level or zone.
Another way to discover support or resistance areas is by looking at "retracements" of a significant price move--price moves that are counter to an existing price trend. These moves are also called "corrections." For example, let's say a market is in a solid uptrend. That uptrend began at the 100 price level and prices rallied to 200. But then prices backed off to 150, only to then turn around and continue to rally higher. This would be considered a 50% retracement of the move from 100 to 200. The 150 level proved to be solid support. In other words, the 50% retracement level proved to be a solid support level because prices dropped by 50% and then moved back higher. The same holds true for downtrends and "corrections" to the upside.
There are a few retracement percentages that work well at determining support and resistance levels. They are as follows: 33%, 50% and 67%. There are also two other numbers called Fibonacci numbers. (Fibonacci was a mathematician.) Those numbers are 38% and 62%. So, these five numbers are the best at determining retracement support and resistance levels. Most of the better trading software packages have these five percentages calculated in a tool, so that all you have to do, for example, is click your mouse at the beginning of the price trend and then at a high, and the percentage retracements are laid out right on a price chart.
Finally, support and resistance levels for markets can be determined by "psychological" price levels. These are usually round numbers that are very significant in a market. For example, in crude oil, a psychological price level would be $20 per barrel, or $25, or $30. In soybeans, a price of $5.00 or $6.00 or $4.00 would be a psychological level. In cotton, 50 cents would qualify. Silver would be $5.00.
There are other methods traders use to determine support and resistance levels, but those mentioned above are the most popular.

9. Spend "Quality Time" Studying Trading and Markets

Futures traders who consider themselves beginners and have traded for less than one year are very hungry for information they can digest in order to move "up the ramp" to an experienced (and hopefully successful) futures trader.
Most of these traders have "day jobs" or other commitments that don't allow them to be full-time traders. Thus, the time they do spend studying futures markets and trading needs to be "quality time."
I have been fortunate in my career, because I get to spend all day long at work studying and being involved with markets and trading strategies. And I love it! I feel a responsibility to my valued traders is to help you focus on the "quality" information you need to study--because the vast majority of you do not have all day long to be involved with the markets.
I began my career in the futures industry,Right away, I fell in love with the markets. After a few days on the job, I told myself: "I'm going to learn all I can about the markets, and then trade them--and we'll be rich!" Well, first of all I was pretty young at the time and was a bit optimistic (naïve??). Secondly, I soon found out that trying to become a successful futures trader is a lot like playing golf: When you first start out, you say, "Hey, this game is not so difficult, and I'm doing okay." But then after you have played the game for a while, you realize how challenging golf really is, and how "green" you really were when you started playing.)
So, what can beginning futures traders do to "ramp up" as quickly as possible, on the road to becoming a successful trader? Below are just a few "nuggets" that I believe will help the beginners get up to speed as soon as possible--and also may get some veteran traders who are struggling back on the right track.
· First of all, there is no substitute for real trading and market experience. You can paper trade for months, but when you've got real money on the line, it's different. Stuff just "sinks in" to your brain and is not forgotten when you're making or losing real money. But the good thing about experience is that it's something everyone can accrue. Just by reading this story, you are gaining some market-related experience, which is part of the experience you need to become a successful trader.
· Become familiar with the markets you plan to trade. Not only study the markets and their supply and demand fundamentals, but also study how the market is traded--on what exchange, the contract size, trading hours, expiration of the contract month, delivery notices, if applicable, etc. All of this information can be found free on the Internet. There is also other valuable information on the markets at those sites. Again, it's all free.
· Read some good books by successful futures traders. Not only do you need to know the markets, you also need to know how the successful traders trade them. Much of a trader's success comes from his or her "trading psychology." The best place to learn about trading psychology is from books, such as Jack Schwager's "Market Wizard" books. The better books also discuss money management in futures trading, which is also very important.
· Study a variety of trading methods--not just one trading system. I am asked a lot of questions from beginning traders asking about a certain trading system that costs X amount of dollars. My advice is to them is to take the money they would spend on a single trading system and go to a quality seminar and listen to several of the best traders in the world explain why they are successful.
· When studying, don't dive into just one subject or one market and focus solely on it. Spend your study time touching on several topics or markets. My experience is that I absorb more of the subject matter (and it's less boring) when I read some of it, and then come back to it later. Also, if you get into complicated subject matter, sometimes it's better absorbed when it's digested in smaller pieces.

Shasun Chem and AB NUVO

Shasun and ab nuvo both given last month have moved up well taking support as mentioned in the blog. Shasun has a good target which seems to be achievable faster than mentioned because all CRAMS stories are doing well. Hold on and also add more on dips for a good 100% return.

Aegis Logistics

Triangle Breakout: ALL confirmed breakout from its weekly triangle,
when it closed and sustained above 150. If a channel is constructed with
base of A and A1, the projection from point B and B1 comes to levels of
198. However prior to 198 there is an important pink trend line resistance
of 178 which need to be broken for further up move.

Shasun Chemicals

Shasun is in transition from a pure API
supplier to a serious contract research and manufacturing services (CRAMS)
player. Its dependence on the legacy active pharmaceutical ingredient (API)
business (the key reason for low valuations) has declined materially post the
acquisition of Rhodia’s CCS business and since its foray into formulations (tieups
with Glenmark & Actavis).
Shasun's acquisition of Rhodia’s CCS
business marked a major foray into innovator CRAMS, with access to an existing
set of contracts and established relationships with emerging pharmacos, where
it had limited presence. Innovator CRAMS accounted for c52% of sales in FY07,
and is expected to increase further going forward as synergies are exploited.
More business drivers = Higher valuations — Shasun’s foray into innovator
CRAMS and generic formulations adds more exciting growth drivers as well as
diversity to its business model – the absence of which is the main reason for low
valuations, in our view. We expect this to change for the better in line with the
improving revenue mix.
P-III contract: potential money-spinner — Shasun indicates that SPSL has a
contract for an NCE (currently in P-III trials), which could be a key growth
driver. Shasun expects the innovator to launch the molecule in late 2008; if
successfully launched, Shasun would be the sole API supplier for the US market
for three years. We estimate an option value of Rs35/share for this opportunity.
Valuations:
Given that Pharma is a growth sector, we use P/E as our primary method to
value the base business of every company. At the same time, since many
pharma companies have some unique opportunities that could play out, we
ascribe a separate value for these. For Shasun, we use a combination of P/E (for
the base business) and probability adjusted NPV (for a phase III contract)
approaches to arrive at a 12 month target price of Rs165/share.

Technically also the price target works out to 165-167 which is the resistance the script would face at the upper trendline. Add Shasun on dips from here with a support at 86 and stop loss at 83.

How has the subprime mortgage meltdown affected Global Emerging equity markets?

The market volatility caused by the implosion of the subprime mortgage market is a classic bubble that emerging market portfolio managers view as a normal, healthy correction in the market. Many emerging market stocks have been hit indiscriminately as a result of the increase in risk aversion. Unlike many U.S stocks which have direct exposure to the subprime issues, such as certain financial institutions, or indirect exposure such as homebuilders and consumer related stocks, almost no emerging companies have direct exposure to these issues. Emerging market growth remains self-funded, there is ample liquidity in these markets, their economies are stronger than they ever have been, corporate profits and balance sheets remain robust. Our analysts are reviewing their top rated stocks and upgrading those that, following recent declines, now present even more attractive investment prospects. As portfolio managers we try to take advantage of such periods of short-term volatility and we are finding many good buying opportunities during this period. We have followed this approach in previous corrections and our relative performance as the market readjusts upwards has been strong. Our investment approach and our view on the markets have not changed because of these recent events.
Given emerging market’s strong advance over the past several years, we are not surprised by this correction in a long-term bull market. Nonetheless, we are encouraged by the relatively healthy global economy and the wide range of appealing investment opportunities present in today’s market. We believe that quality stocks are currently selling at an attractive price, and our objective is to identify stocks with good valuations, reasonable upside potential, and relatively limited risk.

Aditya Birla Nuvo

AB NUVO a company which is yet to unlock tremendous value. A company
which holds major chunk of stocks on Birla companies managed by Mr.
Kumaramangalam Birla.
AB NUVO which held shares of IDEA Cellular pre IPO, was trading at Rs.
750, saw a good value being unlocked through the IPO and the results of
which are being seen now at 1300.
AB NUVO also holds shares of companies such as Transworks which is
Indias 3rd largest BPO with great potential. Another company which makes
this script attractive is BIRLA SUNLIFE. Birla Sunlife which is again
rated among top 5 in the Life Insurance sector would break even this
year and would be among the only three companies in the private sector
insurance companies to see profits.

AB NUVO has two new IPOs lined up in the coming 3 years which are likely
to take its post IPO (of Transworks and Birla Sun life) price to Rs.
2900-3200 range.

Like the value unlocking seen in GE SHIPPING, ZEE, RELIANCE, INDIA BULLS
in the past, the values of all demerged companies giving returns to
investors upto 4 times, AB NUVO is another expectant in this category.

An investment made on dips with a 3-4 years horizon would fetch good
returns.

Technical View
AB Nuvo has strong support of the trendline in the range on 1250-75. A further dip from here would be an excellent opportunity to buy near next supports of 1200 AND 1150. Over all long term trend intact with targets of 2200 and 2950.

Market View 17-08-07

Markets started correcting after touching the upper channel trend line as expected. A correction of 61.8% of the rally starting from 3600 has almost been seen with just few more points remaining. A pull back from this level would be likely or after some side ways movement. A break of 3940 would be crucial for the markets.
The sub prime issue is still not over, even tough it does not impact Indian economy, but the liquidity issue world over and the fear would lead to further panic.
It is advisable to Buy stocks like, RELIANCE CAPITAL, COMMUNICATIONS, ENERGY, BHARTI AIRTEL, INDIA CEMENTS, MIC ELECTRONICS, PUNJ LLOYD, KPIT CUMMINS, TATA MOTORS, ICICI BANK, BANK OF BARODA, ADITYA BIRLA NUVO upto 30% of your total investment and hold for long term. More can be added on dips.

Sub Prime Issue

Recent developments in the US and other western countries which is creating havoc called "SUB PRIME". How it impacts and its pros and cons please read the article.

*What is Sub prime mortgage?*

Sub prime lending, also called "B-Paper", "near-prime" or "second
chance" lending, is a general term that refers to the practice of making
loans to borrowers who do not qualify for market interest rates because
of problems with their credit history. Sub prime loans or mortgages are
risky for both creditors and debtors because of the combination of high
interest rates, bad credit history, and murky financial situations often
associated with sub prime applicants. A sub prime loan is one that is
offered at a rate higher than A-paper loans due to the increased risk.

Sub prime lending encompasses a variety of credit instruments, including
sub prime mortgages, sub prime car loans, and sub prime credit cards,
among others. Sub prime lending is typically defined by the status of
borrowers. A sub prime loan is, by definition, a loan made to someone
who could not qualify for a more favorable rate. Sub prime borrowers
typically have low credit scores and either a limited credit history, or
histories of payment delinquencies, charge-offs, or bankruptcies.
Because sub prime borrowers are considered at higher risk to default,
sub prime loans typically have less favorable terms than their
traditional counterparts. These terms may include higher interest rates,
regular fees or an up-front charge. Proponents of the sub prime lending
in the United States have championed the role it plays in extending
credit to

consumers who would otherwise not have access to the credit market. But
opponents have criticized the sub prime lending industry for predatory
practices such as targeting borrowers who did not have the resources to
meet the terms of their loans over the long term. These criticisms have
increased since 2006 in response to the growing crisis in the U.S. sub
prime mortgage industry, wherein hundreds of thousands of borrowers have
been forced to default and several major sub prime lenders have filed
for bankruptcy.

*Crises*

Beginning in late 2006, the U.S. sub prime mortgage industry entered
what many observers have begun to refer to as a meltdown. A steep rise
in the rate of sub prime mortgage foreclosures has caused more than two
dozen sub prime mortgage lenders to fail or file for bankruptcy, most
prominently New Century Financial Corporation, previously USA’s second
biggest sub prime lender. The failure of these companies has caused
stock prices in the $6.5 trillion mortgage bundled securities market to
collapse, threatening broader impacts on the U.S. housing

market and economy as a whole. The crisis is ongoing and has received
considerable attention from the U.S. media and from lawmakers.

Observers of the meltdown have cast blame widely. Some have highlighted
the predatory practices of sub prime lenders and the lack of effective
government oversight. Others have charged mortgage brokers with steering
borrowers to unaffordable loans, appraisers with inflating housing
values, and Wall Street investors with backing sub prime mortgage
securities without verifying the strength of the underlying loans.
Borrowers have also been criticized for entering into loan agreements
they could not meet. Many accounts of the crisis also highlight the role
of falling home prices since 2005. As housing prices rose from 2000 to
2005, borrowers having difficulty meeting their payments were still
building equity, thus making it easier for them to refinance or sell
their homes. But as home prices have weakened in many parts of the
country, these strategies have become less available to sub prime
borrowers. Several industry experts have suggested that the crisis may
soon worsen. Lou Ranieri, formerly of Salomon Brothers, considered the
inventor of the mortgage backed securities market in the 1970s, warned
of the future impact of mortgage defaults: "This is the leading edge of
the storm. … If you think this is bad, imagine what it's going to be
like in the middle of the crisis." There Is a possibility of five
million foreclosures that may occur over the next several years as
interest rates on sub prime mortgages issued in 2004 and 2005 reset from
the initial, lower, fixed rate to the higher, floating adjustable rate
or "Adjustable rate mortgage". Other experts have raised concerns that
the crisis may spread to the so-called Alternative-A (Alt-A) mortgage
sector, which makes loans to

borrowers with better credit than sub prime borrowers at not quite prime
rates.

Some economists, including former Federal Reserve Board chairman Alan
Greenspan, have expressed concerns that the sub prime mortgage crisis
will impact the housing industry and even the entire U.S. economy. In
such a scenario, anticipated defaults on sub prime mortgages and tighter
lending standards could combine to drive down home values, making
homeowners feel less wealthy and thus contributing to a gradual decline
in spending that weakens the economy.

* *

*Conclusion*

This is proving to be more like a LTCM (Long term Capital Management, a
Mortgage Fund that went bust like the present Bears Funds), a recession
in the US cannot be ruled out and if there is a recession in US entire
world economy would be depressed. India is not completely dependent on
the US and the internal demand is enough to fuel the growth in India for
at least for next 10 years. This crisis may present us a very good
buying opportunity.

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Market View (21-07-07)

The level of 4685 is a crucial resistance level next. Its the level of fibo 1.618 and it also corrosponds with the resistance channel level. This levels should be achieved in coming 1-2 weeks from where profit booking would be seen.

A channel beganing from the high of 2006 connecting the high of January/Feb 2007 and high of July 2007, shows that NIFTY is near its resistance.
Now, this happens to be a crucial level. One can expect a correction from here upto levels of 4300-4250. On break of this resistance line can lead to a further rally upto 4650.
Today I would like to give views for traders and investors on technical and fundamental grounds.
From Feb of this year we have seen market in a negative mode till May end. There after market started rallying but no retail investor or trader has made money. Its now after the Infosys results when market has seen a good movement, I seen targets being given for stocks which are 10-25% up from here. A stock which has already seen a rally would not necessarily rise so much. Stick to stock specific moves from here with stoploss. Mid caps will continue to rise, mid caps have seen a sluggish movement for last year and a half. Even if Nifty sees small correction, it may not pull the market down over all. certain stocks would tank which are over heated.

Market View (05-07-07)

Market took a dip to correct to its weekly averages. Reliance did dip but not ONGC. Its still safer to be stock specific in sectors like cement, banks, engg. Avoid huge quantities and use stoplosses. Upside in Nifty above 4370 is 4444. Market may face resistance any time and take a dip upto 4200-4140 levels on small negative news also. The reason being volatility and stock specific movement which is generally not a good sign.

ONGC - May decide the market trend as well

ONGC has closed near a very crucial support today. On break of 858 levels tomorrow a fall upto 790-800 and 750 levels will be seen. However, a bounce back from current levels would mean a rally upto 970-1000 range. Now ONGC has the highest weightage on the Index, which means, it will be one of the deciding factors for the market in the coming days. As you know we are also bearish on Reliance which is another biggie, Market would be extremely volatile/risky in coming days. It is advisable to be very stock specific in trades, use stoploss and avoid delivery for long term. Play with swings or buy stocks which are really low valued and will not be affected much in 1000 points fall or so.

Gustav...

Market View (4-07-07)

As expected and said yesterday an intraday correction seen on nifty. though sensex was stable with the help of cement sector. A further fall on nifty upto 4325 is possible tough not necessary.
Also as said yesterday Mid cap index made a high of 6075 exactly as said and then corrected. Some consolidation will be seen in this before a fresh rally, also possibility of a mild correction. One should look at construction stocks like Sobha, Parsnath, IBulls before DLF listing tomorrow. If DLF lists +ve or with good margin then all stocks will rise. Construction stocks gained back and are in action. Further steam is left in this sector.
IT should be avoided till infosys' quarterly results are out. Reliance continues to look weak for the coming weeks. Should avoid longs in this and rather go short in this above 1750 levels.

Arvind Mills

Arvind Mills was recommend for delivery on Tuesday at 45 for target of 52-55-60. Currently its trading at 49. It is sustains above on weekly basis it can rise further upto 82-88 levels in coming months. Last week some soaps were given to the textile sector which has been lying dull since last few months.

Petronet LNG

Buy Petronet LNG above 60 for 68-72 Stoploss 57.

Reliance - Not a bull any more

It may be shocking to most of the bulls here, people may think I have gone out of my senses but the fact remains that Reliance Industries is not strong for a longer period. Reliance was stable in the early months of 2007 when market was volatile and it remained bullish for rest of the time. Considering its quarterly results which would be out soon, I expect Reliance to consolidate/fall from levels of 1750-1800 to levels of 1570, 1430 and 1310.
First of all I do not call this kind of market a bull run. A run in which selective stocks move cannot never be a bull market. Its more a stock specific market driven by news and speculation. It cannot hold good for long and the ultimate Fundamentals have to come into play.
One can use part of the profits made in this rally to buy Put Options of Reliance of 1600-1640 and roll over. This way you would not be putting your capital at stake but just part of the profits.

Market View (3-07-07)

Markets have been making new high everyday since last few days. Most of the sectors are moving up and stocks which had not moved up have also started their journey. Is this the begning of a new rally or just going towards the end of the upper channel of this range bound market? In my view market is still range bound with upper target in the range of 15100-15400 with lower level of the channel being seen at 13500. One should be very stock specific in this market and book profits on all rises and use strict stoploss. Soon we would be seeing Infosys' results whcih does not seem to be too strong due to weak dollar. thought market seems to have already discounted that, we should still be prepared to book out in all longs and wait for a dip/opportunity if the market gives a signal of weakness. Last two days of rally may be followed by a small intraday correction tomorrow seeing levels of 14400-500.
Cement, banks and selected mid cap stocks still look good to me which i would be holding on to for some more days. Stoploss for all these scipts would be 4280 on Nifty.

DSK, Patel, Era and Sobha

All recommendations give have started moving, era given above 380 is now 450 (10% up), DSK hits 3rd consecutive upper at 271.40, Sobha made an intraday high of 985. Use trailing stoploss for all recommendations.

Micap Index

With the indexes making new highs everyday the mid cap index has seen a consistantly good rally. Its now close to its upper target of 161% at 6074 where it may face some resistance and under go consolidation before a fresh rally starts.

Sobha Developers

Sobha Developers looks strong above 940 levels. Buy for target of 1088 with stoploss at 910. Among all construction stocks I prefer Sobha for their presence in cities which are still coming up and not saturated and also for the kind of project they take. Longer term target of this stock is 1300.

Mahanagar Telecom

MTNL is a good stock to buy from a long term perspective. A close above 190 would be a good breakout and a perfect level to enter. till then its in a range of 130-185 levels. It can make new highs to 260 and 350 in coming months.

Patel Engineering

Patel Engineering on a weekly close above 425 would rally to 650 and 725 with a longer term target of 1000. Stop loss for long at 390.