Since mid of August, I have started doing this as a study so the readers of this blog can learn along with me. I am also giving valuable list of stocks for quick profit. If anyone bought Kiriindus and Trent on the morning of 25th August as they showed up in 24th August list, they would have gotten a profit of 4-6% by evening.
I got inspired for this selection when I once noticed Indigo on daily chart and next day bought its CE at 9 and sold at 18 after few hours. Later traded TNPL, INFIBEAM, DIAMONDYD, JOCIL, BLISSGVS, ATULAUTO, during mid weeks of August and booked about 5% profit in a short time. Every stock may not rise the very next day. But I observed the potential for a rise in the next 10 days, on few stocks over a historical period of five years. Thus I decided to make such list everyday and trade familiar stocks or observe them for building trading watchlists to grow familiarity to trade later.
| company symbol | % rise today | today's close price |
| AMBER | 1.2 | 1835.7 |
| CYBERTECH | 11 | 57.2 |
| EIMCOELECO | 4.4 | 348.1 |
| GENUSPOWER | 4.5 | 26.4 |
| RELAXO | 1 | 656.6 |
Same table as a picture.
Commentary:
Interesting to see RELAXO coming up. Because I am holding bataindia with big loss for a long time and noticed it showing strength recently. Even today both went up after opening with a gap down due to overnight huge falls in Dow/Nasdaq. But this is too late to be of any use.
It has become clear now that the markets have decisively changed to negative sentiment. This kind of observation is more important for trading than other analyses. The smaller list also conforms to it. We might see further falls in the days ahead. But the real risk is if the market falls increase as it makes newer lows. I am thinking that may not happen, atleast yet.
The markets have zoomed because for the first time in BJP govt. that we saw the finance ministry announcing something supportive to the markets (even if it is not comparable to what developed countries announced). Earlier any chance they had to announce something they only did it worse. And the markets tumbled everytime like the covid19 crash. This is the first time in 3 years that the markets made a broad based rally and showed me the way to build this kind of list. So unless our govt. announces again like it did in the past years, we may not see such bad crash. US elections are also coming up. So it could be getting timed to that. Maybe 2-3 months of uncertainty ahead.
It is better to avoid short term stocks now. If a fundamentally good business shows up that we can hold even during a crash, then only it is worth trying them. Otherwise it is better to stick to good stocks. Today Astrazen and Dixon showed good recoveries, even by eod. Tracking these and bataindia for few weeks, now I am beginning to wonder, should I be focusing on lists that show up new stocks everyday? Make a watchlist of fundamentally good stocks that have investor interest and focus on them. Observe the trends and pullbacks and enter as the strength shows up in them. This is not so hard if we get used to it. Till then following lists and noting few stocks from them for long term watch list is a good idea.
Another thing I noticed is that the stocks that had a huge run up recently are going down easily. That means profit booking. Stocks that didn't rise in the last month rally are trying to rise now despite the fall. So it is always safer to pick stocks that haven't gone up a lot already. Entering in the middle of a trend is a gamble. But if we are in it from the beginning of trend, we can also hold for a jackpot move if that were to happen but letting go of some profits.
However, if there is any major bad news that comes up unfortunately down the line, we could see bad market crash that leads to bigger red candles on NIFTY as it crosses lows day by day, week by week. In such case, nothing gets spared. What starts as profit booking, turns into panic selling. We need to see what is the major news. It is important to sell some stocks, however. For ex, holding bataindia was a bad idea from March as panic sales set in. The impact of lockdown on its business is easier to estimate relative to something say Divislab. We need to make some guesses to hold stocks. Or get out and see the news to make a pattern of what kind of impact will be there on different businesses and get back into stocks selectively. Even if we miss the first rush of buying, we can find them and enter on first pullback because 1) they might (or their sector stocks) show up in the list, 2) sentiment doesn't change overnight, so any rise will be used for reducing losses. This is one way you can prepare to deal with a major crash. If it is a smaller market reaction, nothing to worry. One buy at some level in the fall and we can recover in no time. We should not try to pick the top and bottom and get trapped in unmanageable situations.
If you liked this post, you can check any of the Reaction boxes below. If you want to post any questions or share thoughts, feel free to add comments below.
Read the disclaimer on the right side of this blog (in desktop mode) before making any investment/trading decisions.
No comments:
Post a Comment