Mid Day Musings.

The Nifty is currently trading at 6168, up 25.90 points. This is at 1305 hours. The market has given up a lot of its early morning gains. For the day trader, today qualifies as a choppy day – frirst the market moved up, triggering a buy. Then, it moved down, triggering a sell. Today’s failure to sustain new highs should not be taken as a start of a bear market . We need to have a sense of proprotion. After a blistering 900 point rally (from 5350 to 6250) the Nifty is going to see dips and corrections. In the context of the rally, an intra day decline of 60 or 70 points is no big deal (of no importance).

Fo all those who are waiting for a market decline, here is a thought: all markets correct. a correction is not a decline or a bear market.

I will be on Bloomberg UTV on Tuesday, October 5 at 9 AM (morning). Have a look.

The trend is up, therefore traders should position themselves to buy on dips. Apart from the Nifty, it is possible to trade in individual stocks – equity, futures & options. The basic rule remains the same, identify the trend, if it is up, then buy a breakout or dip. The market is in an uptrend, therefore most stocks will qualify for buying.

If you wish to buy, then hold for a few days to weeks, and sell out, you are a swing trader. You should be looking at equties mainly to buy, take delivery and wait for the appropriate exit. When you take the trade, identify a protective stop loss.

How do you identify the stock? Use a trend mechanism – higher highs, higher lows OR a rising moving average OR a trend indicator which is in a Buy. The reverse holds true for stocks to sell.

When you follow these simple rules written above, the biggest benefit is that you do not go against market flow.

based on the ideas mentioned hre, some stocks that may outperform are: BEL, GAIL, SRF, TATA CHEM. I have positions in Tata Chem. I also intend to track the others for low risk buy signals. No rush!