Good morning to my readers. As I had mentioned last week that the markets will be volatile it indeed was. Now this volatility is what most of the analyst would say is in their favorite language “Overbought” and “Oversold” which now has become a very common word among investors in the market. But what most of the people fail to realize that overbought and oversold conditions can prevail in a market for a long time and waiting for reversals is far much better than taking a position and hoping for a reversal. Hoping for reversal will cost you margins and even losses on expiry of contracts. But taking a position after the confirmation of reversals is far more recommended. I do not wish to hurt the sentiments of my readers who indeed had put in their hard earned money in the markets, but what has really surprised me that even after my requests to people to exit their positions and book their losses they went ahead and continued holding their positions which caused them huge losses. I really appreciate my readers calling me and asking to give them a future direction in their positions. But I also had said earlier that all I can do for you is to give you a stop loss so that I can minimize your losses because most of the times I receive calls from people who are caught on the wrong side of the market. Of course I want my readers to make money in this market, but if you do not follow the stop losses in a disciplined manner how can I help you.
In the month of august we witnessed the commodity prices rising to unprecedented heights. But I would not like to call it overbought, I would rather call it panic buying, and believe me those who had buy positions in this panic buying are now in panic selling situations. The rains have indeed turned the situation for all the crops and the physcology of the markets have now turned to higher crop output. But what I need my readers to understand is that even if the rains have come in late the crops that were sown earlier have already suffered. Now that the new wave of rains hit the country the farmers are again going in for fresh sowings which obviously creates a situation of late harvesting. Now in this situation if the crop arrivals are delayed then this panic selling will automatically turn into new buying opportunities. I do not say that the prices will simply shoot up to new heights but they will again rise up to meet their resistances at older highs. What investors need to watch now is not the opportunity to sell in this market but wait for confirmation of reversals and then buy for smaller profits on the buying side. If you wish to sell any commodity now at these prices you will be looking at very small profits against big stop losses.
India is not facing any drought situation lets be very clear on that, because if a drought situation has to be declared then the country should have only 25% rains in the whole monsoon season. That is the right definition of drought. So if the news channels keep on flashing drought all the time, you need not panic but what is really a sorry state that the news channels create such a hype of anything without even cross-verifying any details. The race is simply on to be the first to flash the news. The country has till now received 70% of its rains and we still have time till mid September. The perfect time to take any position will be after 9th September because by then the rains will be all over and the real crop situation will be in front of you. At that time you won’t be caught on the wrong side of the market. There are very few commodities have the selling potential so please be cautious in selecting those commodities. Have a happy week trading…
Sunday, August 30, 2009
Tuesday, August 18, 2009
THE VOLATILITY WON'T STOP FOR THIS WHOLE MONTH...
The volatility in the market is giving everyone sleepless nights. With commodity prices hitting upper and lower circuits on the same day it is very difficult for anyone to catch a perfect trading trend. I know since last two weeks I have saying the same thing that the markets will be volatile and to trade carefully. But if it is the case then I cannot change the truth of it, the markets are volatile and they will remain till mid September and by gods grace if you are lucky you will make money. Believe me it is your luck that is giving you money in this volatile markets because it is very difficult for any analyst to predict moves in this market on intraday basis. How much ever they try the stop losses will be hit. Let me put a very hard fact in front of you, not everyone can afford to make money in this market. It is only a few who follow a discipline can make money, because if you do not have control on emotions you cannot make money. Till the time an investor does not learn to book losses they won’t learn to make profits in a disciplined manner. I have learnt this lesson myself because when I started in this market even I was making the same mistakes. The general physcology of the investor has not changed as yet so they cannot hold any position for a long time as they know that if the prices of commodities are rising they will buy it but will not have the conviction to hold on to it because it is expensive and there is a scare that their positions are very risky to hold at such high levels and they will sell off and book their profits. I bet most of the investors are doing this in the market.
Coming back to rains as I had mentioned last week that if we do not receive rains by this week then we will be having only withdrawal rains. But now that the rains have come in they have come in with a bang and I am a bit scared that maybe Bihar will be facing floods again. You have already seen the devastation in China with the typhoon and I won’t be surprised that east coast of India will have some heavy rains and winds which means Orissa, west Bengal and Bihar. And the funniest part is that in the past history of India when Vidharbha region in Maharashtra had received the drought relief funds after that the same region had floods immediately. That’s why I have never been dependant on our MET department when they come to predict the rains. The MET department has never been right in their prediction because it is not their mistake but the infrastructure is not enough to allow them to predict the rains accurately. They are really in a very sorry state.
The crop figures have not come in as yet and there are many doubts in the market of what the crop figures going to be in future. The last whole week sugars has been in focus and believe me the investors in India are definitely cursing the government of banning that commodity, because they could have made some good money trading on the long side. But my dear readers I have a strong feeling that by September you will see the sugar prices falling like a pack of cards, because the prices are overvalued and there is no way that anyone will consume such expensive sugar. I feel by now the consumers of sugar will start having diabetes with the shock of hearing sugar prices forget consuming it. I am still of the opinion that I do not have any commodity to trade or suggest to any of my readers as I had said earlier I cannot challenge the rain gods and take any risky position in this market only to loose money. All I would say is try your luck trading but do not stretch it by having large quantities.
Coming back to rains as I had mentioned last week that if we do not receive rains by this week then we will be having only withdrawal rains. But now that the rains have come in they have come in with a bang and I am a bit scared that maybe Bihar will be facing floods again. You have already seen the devastation in China with the typhoon and I won’t be surprised that east coast of India will have some heavy rains and winds which means Orissa, west Bengal and Bihar. And the funniest part is that in the past history of India when Vidharbha region in Maharashtra had received the drought relief funds after that the same region had floods immediately. That’s why I have never been dependant on our MET department when they come to predict the rains. The MET department has never been right in their prediction because it is not their mistake but the infrastructure is not enough to allow them to predict the rains accurately. They are really in a very sorry state.
The crop figures have not come in as yet and there are many doubts in the market of what the crop figures going to be in future. The last whole week sugars has been in focus and believe me the investors in India are definitely cursing the government of banning that commodity, because they could have made some good money trading on the long side. But my dear readers I have a strong feeling that by September you will see the sugar prices falling like a pack of cards, because the prices are overvalued and there is no way that anyone will consume such expensive sugar. I feel by now the consumers of sugar will start having diabetes with the shock of hearing sugar prices forget consuming it. I am still of the opinion that I do not have any commodity to trade or suggest to any of my readers as I had said earlier I cannot challenge the rain gods and take any risky position in this market only to loose money. All I would say is try your luck trading but do not stretch it by having large quantities.
RAINFALL IS DEFICIENT TILL NOW...WITHDRAWAL RAINS IN SEPTEMBER OUR LAST HOPE...
The rain gods have not been very soft on us this year. Now is the time that we can say that the rains are deficient. If by end of this week we are not receiving some good rains then the only rains that we will be experiencing now is the withdrawal rains in September. The effects of these can be already seen in the prices of the crops. I had some researcher from South Korea who sent me the report regarding the rains being less in India this year. They have been saying that India has problem and the clouds are not entering the landmass. Most of the pressure is being directed towards china as they are facing the trouble of typhoons. It is clearly evident that the pressure zones have shifted towards china and there is a possibility they may be facing some floods. The government had tried its hands with cloud seeding over Madhya Pradesh and Maharashtra but they did not help much. But such is the dilemma of our system if a permission of cloud seeding has be obtained then the process takes 1 month of total approval from all the authorities. One thing is for sure that the government was very late in taking the decision on cloud seeding program, or by now we would have not faced the situation that we have been facing now of no rains.
Cloud seeding is a procedure where in a chemical silver iodide is released in the environment which will make the clouds rain. When we had sufficient amount of clouds the MET department did not take any action and waited for the natural action of rains to take place. It simply does not make any sense now because cloud seeding works only when we have clouds over our heads. Without clouds even cloud seeding does not work. It is really a very sad situation where our own weather experts have to subscribe to international agencies to predict our rains where it is so well known that India as a country is highly dependant on rains.
The worst affects can already be seen in Gujarat, Rajasthan, Uttar Pradesh, Madhya Pradesh, Haryana, Punjab and most of the northern parts of our country. Maharashtra has been a bit lucky along with the southern states that have received the initial rains. The commodity prices have already been sky rocketing with no end in sight. Now the biggest problem that the commodity prices are facing is that most of the commodities have reached their all time peaks and now the markets are in a wait and watch situation as where will the prices head now. The skepticism can be clearly seen as the prices hit the upper circuit and the very next day lower circuits as the speculators are scared to hold any long term positions. They simply do not wish to carry their positions overnight.
The weather conditions that we are having now can turn directions for various commodities.Commodities that will take their direction up due to deficient rains:
Guarseed
Guargum
Sugar
Castor
Wheat
Rice
Commodities that will take their direction on the downside due to high prices and lack of demand, as they are very much driven by consumption and these commodities do not perform well as they are not considered essential for survival. A cut in consumption in these commodities does not pinch a lot.
Crude oil
Gold (if the farmers do not make money they wont have money to buy gold as gold is the only investment they believe in)
Silver
Spices
Now as far as trading is concerned I have been very cautious with certain commodities as I had mentioned earlier that the rains by the mid of august will help me analyze which commodities to trade. Now I am very much clear in my research and I am ready to trade. I urge my readers to make sure that even if you feel bullish or bearish of any commodity make sure that you trade in small quantities because I still would like to warn you that the volatility will not end till the end of September. Wishing you happy trading and a profitable week.
Cloud seeding is a procedure where in a chemical silver iodide is released in the environment which will make the clouds rain. When we had sufficient amount of clouds the MET department did not take any action and waited for the natural action of rains to take place. It simply does not make any sense now because cloud seeding works only when we have clouds over our heads. Without clouds even cloud seeding does not work. It is really a very sad situation where our own weather experts have to subscribe to international agencies to predict our rains where it is so well known that India as a country is highly dependant on rains.
The worst affects can already be seen in Gujarat, Rajasthan, Uttar Pradesh, Madhya Pradesh, Haryana, Punjab and most of the northern parts of our country. Maharashtra has been a bit lucky along with the southern states that have received the initial rains. The commodity prices have already been sky rocketing with no end in sight. Now the biggest problem that the commodity prices are facing is that most of the commodities have reached their all time peaks and now the markets are in a wait and watch situation as where will the prices head now. The skepticism can be clearly seen as the prices hit the upper circuit and the very next day lower circuits as the speculators are scared to hold any long term positions. They simply do not wish to carry their positions overnight.
The weather conditions that we are having now can turn directions for various commodities.Commodities that will take their direction up due to deficient rains:
Guarseed
Guargum
Sugar
Castor
Wheat
Rice
Commodities that will take their direction on the downside due to high prices and lack of demand, as they are very much driven by consumption and these commodities do not perform well as they are not considered essential for survival. A cut in consumption in these commodities does not pinch a lot.
Crude oil
Gold (if the farmers do not make money they wont have money to buy gold as gold is the only investment they believe in)
Silver
Spices
Now as far as trading is concerned I have been very cautious with certain commodities as I had mentioned earlier that the rains by the mid of august will help me analyze which commodities to trade. Now I am very much clear in my research and I am ready to trade. I urge my readers to make sure that even if you feel bullish or bearish of any commodity make sure that you trade in small quantities because I still would like to warn you that the volatility will not end till the end of September. Wishing you happy trading and a profitable week.
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