vvonteru said:
As expected, US markets had a broad rally. SP500 took out 200 day EMA easily and crossed 50 day EMA. Lets see how this effects Indian markets. Based on today's action, it was waiting for U.S interest rate verbage. My bias is upwards for tommorow. Indexes will attempt to cross 50 day EMA.
So, indexes did go up. There are very few instances in the market, where you can say it will go in a direction with some confidence. In fact, one of the objective in trading is to stay in the market. i.e., play small, risk less and focus on accumulation. This will help you stay longer in the market to take advantage these easy moments. If you risk more, you will get busted. And you will bust anyone who mentions STOCK word thereafter (you might have come across people who are anemic to STOCK word by now).
ITC
I don't know where you bought. ITC continues to be in overbought condition, giving very less room for entry. 8 day EMA is touching 50 day EMA. Pretty close to crossing. So, fun has just started. But, expect pull back, given its overbought condition. However, you will find people ready to join the train (including you. Wait for pull back before you buy) in this pull back. Watch out for 210 resistance. You should expect selling at this level from those people who were holding all through the pain for the last month. Use strategy of trailing stops. You could use ATR. Read about ATR, which gives the volatility of a stock.
Approximatly, ATR of ITC looks like 8. Use trailing stop = N * ATR. So, lets say you started with a initial risk stop = 3 * ATR = 3 * 8 = Rs. 24. Once profit = 1*R (1 * 24 = Rs24) is reached, you reduce the stop = (2.5 or 2) * ATR = 20 or 16. As more multiple of R (Risk = 24) is reached, reduce N to capture most of the profit. This is just an example. Modify N to suit your confortability and risk level.
RSystem International (cmp 156)
It is very hard to tell with these new issues because of lack of data. Ideally, you should buy new issues only in confirmed Market up trend. Until then, don't mess around with them. Look at the example of RCVL. In fact, only go with those stocks that are moving along with the market. Look at ITC and Reliance. One thing they have common with the market is, they move along with it. Market is the impetus. It is the fire behind the rocket. No fire, No flying.
Ashok Leyland
First Resistance = 42
Second Resistance = 52
