Market Summary - Weekly Report - 26.07.2018

With a lot of hopes building up in the first 3 days of the week, the ASI ended 20 points above the previous weeks' open. Below are the Major Markets, that would impact the direction of the CSE in the week ahead.......

ASI - Remember my chart on the 11th of July 2018, and how it looks like now

11th July Chart is below

How does it look like now

As you can see ASI hit the red line on the 18th and made a pullback to 6160, then continued to move up, and just closed above the red line. We will now see the ASI basing itself strongly at 6200. To do that it must move higher to test 6250. Then re-trace to 6200 area. If we see that pullback diving lower then 6160 to 6150 must hold. However it is clear that 6042 will not be re-visited by the ASI anytime soon.

Alumex - Trade Setup

Alumex has a potential Trade and it is given in the chart below

If you are a trader please don't take this trade without the stop loss rule.You must be fit and bold enough to stop loss. Otherwise please don't trade.

Major Markets - Weekly Summary

ASI broke out of 6177 which was a major resistance level. Short Term Bullish. Time is ripe for those who have not got in yet.

LALU.N.0000 - Trade Setup

Lalu is not a liquid stock as such please buy only what you can stop easily.
If you do not want to stop loss, please do not Trade.

Major Markets - Weekly Summary

ASI closed the week above the present low of 6042. But there is a long way to go. Firstly a reversal can happen between 6150 and 6177. Need to watch that in the short term. Please go through all the charts posted here, as all of these markets have a telling effect on us.

 

 

 

LIOC - Target Hit - 34/- to 35/-

On the 8th of July I shared a post on LIOC. You could have easily made a trade buying between 31/- and 32/-, selling between 34/- and 35/- thereafter.

The chart I shared is below:

Only condition was a stop loss between 29/- and 30/-. If you had followed this trade you could have easily gained within a week.

But if you do not want to stop loss, or you do not know how to do it. Please do not be fooled. You are not fit to trade. Overtime you will be a sure looser.

ASI - If 6042 is supported, short term target will be 6187 points

ASI has lifted it's head up - Slightly. It must hold 6042 in the short term. Then we could expect a short term target of 6187. This is not a very big move, but will be good medicine to an ailing patient.
The voices calling out for the Local Institutional support to the market is on the rise, slowly but surely. Values are very attractive, they should not leave room for front running or foul play. The time is great to accumulate in the most attractive way. The valuations are so low, that if collected should be held for a very long period. Even in excess of 30 years. Only the Pension Funds could do so.

ASI - 32 points away for the BEARS to shred the BULLS to pieces

ASI is not helping the bulls at all. Another 32 point drop will bring the bears back to hammer the market down towards the support levels of 5900 and 5800. In this environment the traders can not do much. But the value pickers will be having a gala time. The Market and many stocks are offering them bargains every day. Unfortunately the LOCAL INSTITUTIONAL FUNDS are not to be seen. As I mentioned in another post the valuations are very attractive for the funds to start accumulating. The best way is not to pick large volumes from single parties. Instead you can keep collecting through all Broking Houses, at  the present prices and within a range which will be fair for the Funds and also to the Contributors of those funds. In the past buying from a few parties and broking companies had dismal and disastrous repercussions for all connected. Some of these colossal damages can not be corrected. The culprits, even if they are identified weren't brought to book. But the present environment is very promising for these funds to accumulate by using all Broking Houses on equal grounds. This would avoid the possibilities of front running the Funds as well.

If 6042 is not supported, only a little could be expected for the market to head higher to test the resistance levels.

     

LIOC - Possible Trade....Stop Loss is a must

There were many trading opportunities on LIOC for many weeks now. You can follow the same price levels presently as well. But you must have the guts to stop loss, else YOU ARE NOT FIT TO TRADE. Better to put your money in a savings account or an FD. Stop loss is the no 1 condition.
Next understand the amount you are fit enough to loose on the trade. Is it 100/=, 1000/=, 10,000/= or 100,000/=. Then calculate the loss per share for your trade. Eg. in this trade if you buy at 31, and stop at 30, then you loose 1/=. If you are fit only to loose 1000 per trade and the price loss is 1/=, then the position size/number of shares per trade will be 1000/1=1000 shares.

Major Markets - Weekly Summary

The following charts are effecting the ASI and some stocks in the Manufacturing Sector. Therefore keeping track of them seems sensible and perhaps important. I invite you to watch them with interest...

 

 

 

 

ASI must hold the present low of 6042

After many trend failures and sell offs, ASI recovered again from a low of 6042. That is the level the index should trade above. If not the trend will retrace further. The upside we saw today will test the range between 6200 and 6272, before we see any change. It could even test 6300 which is a psychological level, before a retracement is to take place. If the trend reverses from the up then we will see the support levels of 6200, 6150 or 6100 being tested. However it can not come down below 6042 for the trend continuation is sustained to the up. If the 6042 level is not going to be supported then we will see a steeper fall testing 5900 to 5800 levels.

ASI - Hemorrhage or Carnage OR both?

ASI is on a free fall. Normally in the developed markets, you have institutional investors both local and foreign who step in to accumulate and increase their  investments. Presently in the case of the CSE we see institutional contribution mostly from the foreign side, and less from local side.

Institutional buying is not considered to be naive. These institutions employ the best teams, with immaculate knowledge and qualifications. Their investments are done through extensive studies, and comprehensive strategies. Even if you buy a stock at 205/- lkr, they should have a valid reason. When the same stock is now trading at 59.50 for them not to buy, obviously must be having valid reasons. When one type of Institutional parties out of the foreign or local is buying low another is on the sell side. Then the same seller is buying high at bloody expensive prices, with valuations that are over the roof. For all that these best of the best teams must be having valid reasons.

Today the Foreign institutions are aggressively participating, but mostly to sell. Local Institutions may be aggressive too  but who knows. If they are really really on the buy side, then it is a great moment for the market, as the cheap value of the market is accumulated by them to increase the wealth in the long term. That long term period can be very long. As the present market valuations deserved to be accumulated to be held for GENERATIONS. Most of these local institutions have a role to play in the best interest of the Country, and its stakeholders. Their role should be as long the Country is on the planet. As this country will not disappear from the planet, these institutions must be viewing their holdings and investment as really long term. As I mentioned may be investments for Generations to come.

Hemorrhage is when the blood is escaping from a ruptured vessel, it is fatal. Carnage is the killing of a large number of people. The present situation in the market can be seen in both angles. If you do not have a plan, and do not see long term investors, including the aforesaid local and foreign institutions in action, then you would first Hemorrhage and get caught to a carnage. Is there a reason for us to not feel the local institutional buying because of a valid reason. Are the valuations still high???

Selling what you own. An alternative to Short Selling

So many times I have heard the regrets of not selling when the market has turned from  over bought levels. When the market is loosing its momentum. All these questioning only when the market has reached the bottoms, especially when the market is heavily oversold. We see the frenzied selling, as many prefer to sell or exit from the market during this time, when in actual fact they should be focusing on accumulation. There is no point crying over spilt Milk, instead you need to wait patiently till you see the next opportunity. Oversold areas aren't the best to sell and buy your own stocks. You need to wait for the right moment to do so.

Whether you want to sell now or when the market is higher does not matter as long as you know the risk of the trade. Just like the price could fall when you buy, the price can go up when you sell.

Selling what you own is called Shorting against the Box, in markets where short selling is permitted. In Sri Lanka it is not. So you can't short your own stocks. But you can sell your own stocks. Even if short selling is not available the same principle that applies to short selling can be applied, when selling your own stocks. But the strategy is to have your trading rules in place.

When you are selling your own stocks you need to have Sell, Buy and Stop rules, just like you have rules when you buy.

As many are asking me for strategies on Selling what you own, I will be posting trade ideas on selling your own stock, when the time is ripe.

ASI on the 1st day of the 2nd half of 2018 - DOWN 1.08%

There were many reasons for the market to reverse. Yet it did the opposite. The RSI is heavily oversold, and a little higher than the lows of 2016. It is now opening up to dive down to the present low of 5900. Let's hope that there will be a reversal before then.