One of the greatest trader and one of my favorite trade the greatest Jesse Livermore had echoed something similar about stocks. He always looked for sector , sector and sector before buying a stock. You have a higher probability of making money if you select the strongest stocks from the strongest sector. Today we saw sectoral move in Oil and gas . RIL, ONGC, Essar Oil, Chennnai Petro, GSPL, Petronet all moved. If you were smart enough to identify this sectoral move early in the day you must have earned a handsome profit.
Sectoral movement always plays a key role in stocks movement.
Today we also saw movement in Shipping sector.Some news about the Baltic Dry Index also helped this sector to move up.You can read the news articles by clicking on the given links:
www.bloomberg.com/apps/news?pid=newsarchive&sid=aKmdxZjukbao
The Baltic Dry Index, a gauge of the cost of carrying dry bulk commodities such as iron ore, coal and grain, had made a high of 11600 in January 2008 . It is now trading at 2300. Now the question comes should we buy shipping stocks ?? The answer is no. We should look for the follow up buying tomorrow. If we dont see any further move in Shipping and Oil and Gas stock then we should stay away from these two sectors.
Both these sectors are deeply influenced by the movement of Dollar.Dollar is expected to remain weak. Now weak Dollar will also have negative impact on earnings of IT sector. If Dollar remains weak how commodity price would get affected ? Will the inverse relationship between Dollar and Commodity price go on as always ? Well, markets are markets they do not act the way we expect. Markets have their own logic and markets are never wrong opinions are. You can read about Dollar loosing its status of reserve currency in future :
http://online.wsj.com/article/
For todays trading I will keep Bio Con Ltd and Glenmark Pharma on my radar with stop of 245 and 225 respectively
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