Caution needed with weakening NIFTY

Dear Trader, Below is this week's updated Indian share report for the week of Dec. 18-24, 2016 with the best stock picks, educational commentary, and technical analysis for the Nifty 50 and Indian share markets. Please share this newsletter with all of your friends who also trade the Indian share markets. If you have any questions, just reply to this email and I will help you out right away. Kind Regards, NSE Trader The Indian Investor Week of Dec. 18-24, 2016 Market Timing Mode - NEUTRAL Market Commentary: The NIFTY has struggled to push higher since bouncing into the declining 20-day EMA on Nov. 30 / Dec. 1.  Last week's action saw the NIFTY close below the 20-day EMA in 4 out of 5 sessions, with the price action closing below the shorter-term 10-day MA later in the week. A break of the current two-day low (scenario A on chart below) could lead to a test of the prior swing low, around 7900 - 8000 area.  If the two-day low holds, then there could be another push higher (scenario B), which could put the NIFTY around the 8300 level.  Unfortunately, such a move would be into heavy resistance from the declining 50-day MA and downtrend line.   As of this weekend's analysis, any bounce into the 50-day MA would be tough to trust and not an ideal spot to put money to work on the long side. Share Commentary: The tight stop in DISHMAN triggered last week and we are now out of the full position.  As a gentle reminder, when conditions are not ideal, one should reduce trade risk. For example, rather than risking 1% of account equity per trade, maybe drop to 1/3 or or maybe 1/2 of 1%.  If you are risking 1/2 of 1% per trade, drop to 1/3 or 1/4 of 1%.  There is no right or wrong answer, but the point is to lower the bet size when the wind is not at your back. Note that we raised the stop in STRTECH due to weak market conditions and the lack of follow through from the Dec. 9 breakout on higher volume.  The price action failed to hold above the 50-day MA and is now in danger of breaking the 20ema, which could lead to further selling and a test of the 200-day MA.   When conditions are weak, we also tend to tighten up our stops if we are long, as no stops are really safe when the volatility picks up.  QUICKHEAL may be in play on the long side above the hourly downtrend line.  The chart below is a daily, showing the explosive breakout and tight ranged consolidation that followed. The monthly chart of NMDC below is not something that is actionable right now like QUCKHEAL, as it is currently in base building mode after clearing the monthly downtrend line.  We will keep NMDC on our watchlists, as these type of downtrend line breakouts can to a new uptrend. Please be sure to develop some sort of risk profile before trading shares. For example, decide what you are willing to lose as a percent of account value in every trade. If you are new to trading, then keep risk small until there is a strong comfort level. For new traders, we recommend risking no more than 1/3 of 1% of account value per trade. Experienced traders can risk 1% of account value per trade. Trades should not be sized where three losses in a row will result in a 10% drop in account value. Three losses in a row should produce a 1 to 3-4% loss at most.  Kindly share this newsletter with all of your friends who also trade the Indian share markets  Again, if you have any questions, just reply to this email and we will personally help you out right away.

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