Sensex survives oil flare-up Sensex survives oil flare-up

INDIAN equities eked small gains in Tuesday’s listless session, even as dark clouds gathered in the global skies. Crude oil prices rose more than $2 per barrel to $117.38 on fears that Hurricane Gustav may enter the Gulf of Mexico, home to more than a fifth of US oil production. Russia’s RTS Index hit a near two month low, and the ruble weakened to the dollar following the government’s decision to recognise Georgia’s breakaway regions, which could further worsen its relations with the West. The euro fell to a six-month low against the dollar as German business confidence dropped in August more than forecast. Things were slightly better on the other side of the Atlantic as the US Consumer Confidence Index rose more than forecast in August, and new-home sales improved in July. Back home, the rupee fell to a 17-month low of 44 to the dollar on Tuesday, which is positive for the IT sector, but spells bad news for the country’s trade balance. Select IT majors and a few index heavyweights were in demand as the BSE Sensex rose 31.87 points to close at 14,482.22. The broad-based Nifty ended almost unchanged over the previous close at 4,337. Indices were held in check by a 2.3% decline in Reliance Industries’ shares, as investors are unsure about the price at which the oil and gas behemoth will transfer its 80% holding in KG D6 to its wholly-owned subsidiaries. The market responded positively on the news of a healthy monsoon. India’s annual monsoon rains between June 1, 2008 to August 24, 2008 were just below the long-term average, the government said. Dealers attributed Tuesday’s gains in the key indices to short covering of positions ahead of the derivative contracts expiry on Thursday. But it is the bulls who are on the defensive, say some market watchers. “Traders are going short-selling at lower levels. We expect the market to remain range-bound between 4,000 and 4,500 levels,” said Pravin Agarwal, CEO, Lotus Investments and Securities. In sectoral trends, rate sensitive indices like BSE Bankex and BSE Auto led gainers, rising over 2% each. IndusInd Bank, HDFC Bank, Bank of Baroda and Kotak Bank rose 3-6%. However analysts feel that it is too early to take a call on these sectors as the RBI may hike interest rates further in its attempt to curb inflation. The BSE Auto Index rose 50 points, up over 1% to close at 3,916.49. Gainers were led by Bosch, Apollo Tyres, M&M, Maruti Suzuki, Exide Industries and Ashok Leyland, which were up between 1% and 6%. Technology stocks like NIIT, Satyam, Tech Mahindra, HCL Tech, Wipro and TCS gained over 1-3% as the BSE IT index closed at 3,895.48, up 33 points over its last close.

Copper marginally high

Base metals: Copper higher on US existing home sales
data
Yesterday, copper closed with minor gains on the COMEX as
the US existing home sales data topped the forecast. Sales
of previously-owned homes in the USA grew by 3.1% in July.
However, on the flip side unsold inventory rose. There were
record 4.67 million unsold houses and condos on the market
in July, representing 11.2 month's supply at the current sales
pace, matching the highest ever. The jump in the inventory
was driven by an increase in the supply of condos, as projects
started one or two years ago came on the market, the Realtors
group said.
Yesterday, the London Metal Exchange was closed, so the
trading in the rest of the base metals was in line with that
of copper.
Today, oil prices in Asia rose on concerns that the hurricane
Gustav may disrupt oil operations in the Gulf of Mexico.
However, strong tone in the US Dollar is keeping it down,
though crude oil is expected to find support around $111.
Today, we had German consumer confidence data that
weakened further as fears that Europe's largest economy
will lose more steam than anticipated weighed on the
sentiment. German market research group GfK said that its
forward-looking consumer climate index continued to decline
sharply to 1.5 points for September from a downwardly
revised 1.9 points in August. A Dow Jones Newswires survey
of 14 analysts expected the index at 2.1 points for
September. The Euro is sharply down on this data and has
fallen below its low around 1.4630. The Euro could fall to
1.44 in this cycle. This is bearish for the base metals.
In a further bearish development for the base metals, we
see that China's production is climbing. China's zinc mines
increased their output by 21% in July compared with a yearago
period, producing 331,200 metric tonne of the metal,
while lead production gained 23% to 212,700 tonne in the
same month. Copper output climbed 6% to 2,34,900 tonne.
Various reports suggest that Chinese, the world's biggest
buyers of copper have put off purchases on expectations of
further price decline amid rising US Dollar.
We still remain bearish on copper. A slide in copper could
lead to a downward movement in all the base metals.
Bullion: Flat close
Yesterday, the bullion complex had a flat closing as spot
gold closed nearly $1 lower, while silver was up nearly 17
Cents. Today the complex is taking a hit on sliding Euro. As
crude is expected to stabilise around $111 and a decent
pick up in physical demand for gold is being witnessed at
lower levels, gold could find a support around $800, while
silver could find support around $13.
Sharp plunge in bullion prices in August is due to massive
sell off by some of the US Banks. In short-term as the US
Dollar rises we would see further pressure on gold and silver,
however with festival season round the corner and the US
Dollar fast approaching its short-term target of 1.44/1.43
against the Euro, downside in bullion appears to be limited.
A slip below $800 could take the spot gold to $780. Similarly,
a decisive breach of $13 could take spot silver to $12.40.
These levels could very well be the bottom for these two
metals.

Nify Support @ 4248

The market has opened on a negative note. The Nifty on
the daily chart is trading in a range of 4450 and 4250,
which are crucial levels. We expect the momentum to be
positive and volatility on intraday basis. The market
breadth is negative with 335 advances and 750 declines.
The daily momentum indicator has given a negative
crossover and is trading above the zero line. On the daily
charts, support at 4235 and strong resistance at 4435 are
indicated.


On the hourly charts, an inverted head & shoulder pattern
has formed with a support at 4248 and resistance at 4400.
The momentum indicator has given a positive crossover
and is trading above the zero line. Strong support at 4275
and a very strong resistance at 4331 are indicated on the
hourly charts.

What are penny stocks

Penny stocks can be defined by:
Price Per Share: Sometimes any shares that trade under a certain price are considered to be penny stocks. For example, the SEC considers all stocks that trade for less than $5.00 per share to be penny stock. Different individuals and organizations have their own cut-off.
Market the Stock Trades Upon: In some schools of thought, any shares that trade on a certain market (ie- the OTC-BB, or the OTC, or the 'Pink Sheets,' or the CDNX) are treated as, or considered to be, penny stocks.
Market Capitalization: Market cap is simply the total trading value of the entire company. The value of each share of a stock, multiplied by the total number of shares outstanding, equals the market cap.
For example, 12,343,000 shares of ABC at $0.29 each gives ABC Corp. a market cap of $3,579,470 (12,343,000 shares times $0.29 per share = $3,579,470). That is kind of like saying that the company's total value is 3.5 million dollars.
In some cases, organizations or individuals will treat any company beneath a certain market cap (for example, less than $10 million) as a penny stock.
Interestingly, using option 1 or 3, a company can have its shares change in price moment by moment, and may drop in or out of the definition of 'penny stock' over time. What may be a "penny stock" when the market open in the morning, may not be a penny stock by noon.
In some cases the definition of penny stock is generated by a combination of the above criteria. For example, any stock trading on the OTC-BB with a market cap of less than $20 million is considered a penny stock.

Penny stocks are high risk, high reward investments. It is easy to lose money on a penny stock investment. However, if your shares do begin to move, they can produce hundreds of percentage points of gains, and they often do this in only a short time frame.

Penny stocks are often very volatile, and just as often unpredictable.

Double Moving Average Bounce

The double moving average bounce trading system is a variation of the original moving average bounce trading system. The variation still uses a short term timeframe (such as a five minute chart), but now uses two exponential moving averages. The second exponential moving average is used as a filter for the direction of the trade, so that the trading system only includes trades in the longer term direction of the market.
As with the original moving average bounce, the default settings use a 1 to 5 minute bar chart, but use two shorter exponential moving averages, instead of one longer average. Both exponential moving averages are based upon the typical price (HLC average), with the longer average being a 20 to 30 bar average, and the shorter average being a 10 to 20 bar average. Both the chart timeframe, and the exponential moving average lengths, should be adjusted to suit different markets.

What is Day Trading

Day trading (and trading in general) is the buying and selling of various financial instruments, such as futures, options, currencies, and stocks, with the goal of making a profit from the difference between the buying price and the selling price. Day trading differs slightly from other styles of trading in that positions are rarely (if ever) held overnight or when the market being traded is closed.
Day trading was originally only available to financial companies (such as banks), because only they had access to the exchanges and market data. But with recent technology such as the Internet, individual traders now have direct access to the same exchanges and market data, and can make the same trades at very low cost.
Trading Styles
There are several different styles of day trading, suited to different day trader personalities. The styles range from short term trading such as scalping where positions are only held for a few seconds or minutes, to longer term swing and position trading where a position may be held throughout the trading day. Most day trading systems have a lot of flexibility, and can have open positions for anywhere from a few minutes to a few hours, depending upon how the trade is doing (whether it is in profit). Some day traders will trade multiple styles, but most traders will choose a single style and only take that type of trade.
Day trading also has different types of trade, such as trend trades, counter-trend trades, and ranging trades. Trend trades are trades in the direction of the current price movement (i.e. buying if the price is moving up), and counter-trend trades are trades against the direction of the current price movement (i.e. selling if the price is moving up). Ranging trades are trades that go back and forth between two prices, and are used when the market is moving sideways. Most day traders will choose a single type of trade, but some traders will take different types, and choose which one to trade depending upon the current condition of the market.
In addition to the style and type of day trading, there are other variances between day traders. Some day traders like to make many trades throughout the trading day, while others prefer to wait for what they consider the best conditions for their trade, and perhaps only make one trade per day. However many trades are made, the trading process that is used, and the desired goal of making a profit, are the same.
Markets
There are many different financial instruments, or markets, that can be day traded, and they are offered by various exchanges throughout the world. The main types of day trading markets are futures, options, currencies, and stock markets. Within these types, there are groups of markets based on stock indexes (such as the Dow Jones, and the DAX), currency exchange rates (such as the Euro to US Dollar exchange rate), and commodities (such as gold, and oil). Day traders can have access to all of the exchanges and their markets via direct access brokers, so called because they offer direct access to the exchange, which provides faster trade execution at lower cost.

Dreary close

After opening 242 points higher, the Sensex traded in a
narrow range during the early hours. However in the
second half of the trading session, the index could not
build on its early gains and finally wrapped the session on
a flat note--only 49 points higher than its yesterday’s
close. The Sensex opened near the day’s high and closed
near the day’s low, which points to weakness in the camp
of the bulls. Further, on the hourly charts, the Nifty faced
the hurdle of 40 HEMA from which the sell off came in the
afternoon session. The Nifty also closed below 20 HSMA,
which is one more sign of weakness. On the daily chart,
the level to watch out for support and resistance is 4,250
and 4,400 respectively. Apart from the above story, the
daily momentum is also dying as the indicator KST has
breached the zero line on downside. Market breadth,
which was positive, with more advances than declines
during the earlier half of the session turned in the favor
of bears with 636 declines and 574 advances. This shows
that the bears have overpowered the bulls.
On the hourly chart, though the momentum indicator KST
has not given a negative crossover, it has turned down
facing the resistance of falling trend line. Our mid-term
target is at 4,000 with the reversal at 4,650 while our
short-term bias is still down for the target 4,200 with the
reversal at 4,435.
The Sensex closed 49 points higher, while the Nifty gained
8 points for the day. The BSE Midcap index closed
marginally higher by 0.25%, whereas the Smallcap index
closed 0.05% lower. Of the 30 stocks of the Sensex, HDFC
(up 3.63%) and Tata Motors (up 2.04%) led the pack of
gainers, while Ranbaxy Laboratories (down 2.05%), BHEL
(down 1.6%) and Tata Steel (down 1.49%) led the pack of
losing stocks.