The markets have been quite volatile last week and many investors have been caught on the wrong footing after the major fall in prices of most of the commodities. The biggest dilemma has been that when the prices came down everyone went short and the very next day the prices recovered back. If you have guessed it by now then good, yes I am talking about crude oil. It fell from the high of $68.99 on 27th jul to make a low of $62.70 on 29th jul and the very next day it was again up to give a close of $66.94. usually if the prices of any commodity fall so drastically and the other day if the prices do not fall with the same intensity then it is advisable that you book your profits and exit the market. If not profit book a minimum loss and simply exit and watch the prices. Do not hold the position with a rigid mind, because believe me having a rigid mind for a position can make huge losses.
I have been receiving calls from many readers asking me about natural gas. To much of my surprise investors have been holding natural gas position as if it is a replacement of gold. They ask me what is going to happen in natural gas and my answer is simply to give them a stop loss as I know all of them have bought at unbelieveable prices and have been holding it with huge margins being debited to their account. Why would someone make a mistake of buying natural gas when the fundamentals are not in its favor?? I am really very sorry to say but I request the investors not to mix up my opinion or figures if they have taken a position with the opinion of others. If anyone is suggesting you to take a position it is but obvious that the same person will give you a stop loss. If you try to match up my stop loss with the stop loss given by any other analyst there is bound to be a difference and it will confuse you as you are the one who is investing your money in that particular position. I can only try to minimize your losses but cannot turn that position to a profit making trade as it is not possible.
The markets are going to remain very volatile and I request you to trade in very small quantities. The bulls and the bears have been fighting it out in the market and you really do not know who is going to win. Let’s put this in a simple manner that most of the commodity prices have hit their higher limit prices and some of them their lower limit prices. Believe it of not the solar eclipse has reversed many prices in the market if you really want to cross confirm then match the dates of the eclipse and the price movements in the commodities. You will see major reversals around those dates.
The metal prices had also fallen down drastically on Wednesday and it scared everyone to a major sell off in the markets. Even the Chinese stock markets were down, but what is interesting to know that if you look at the charts of the Chinese stock markets they have rallied from the low of 2037 on 3rd march to a high of 3453 on 29th July. The prices have rallied for 5 continuous months without a single correction then it is quite expected that the prices will fall. Then this fall is actually a correction and not a collapse. There is no reason to worry as hyped by the TV channels.
For all the investors who are still short in crude then your stop loss will be 3250 on closing basis. If the prices close above 3250 then exit your positions the next day. I am writing this article on Friday so if by Monday the prices have closed above 3250 then I request you to please exit your positions and book your losses. If you have your position in gold then wait for the prices to close below $909. if the prices of gold have to fall then they have to close below $909 for two continous days. If they do not then exit your position and wait for the prices to close below $ 865 to sell further but make sure you have your stop losses confirmed. In Indian prices right now your stop loss in gold is 15375, which is equal to $960 more or less in the international markets. Silver will have a stop loss of 22911. natural gas as most of the investors are long your stop loss will be 171.65 on closing basis.
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