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Few Stop Losses Hit But We Recommend to Stay Put - Views on News from Equitymaster

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Few Stop Losses Hit But We Recommend to Stay Put
Mar 7, 2018

Our subscribers are well aware that protecting the capital is as important a mission in Profit Velocity as earning strong long-term returns.

Which is why we not only have stop losses and trailing losses at the individual stock level, but the entire corpus is also split between stocks and cash such that there is never less than 25% allocation to each of these asset classes.

The BSE Sensex has lost over 1,000-points over the last three days - a significant correction indeed. Perched comfortably above the 36,000 mark once, the index is now trading close to around 33,000 level. And this is clearly making investors nervous.

The Market Momentum is Still Strong

However, what if we tell you that the index is still in a strong uptrend the way we measure it in Profit Velocity. Yes, that's right. Our indicator suggests that there is a greater possibility of the index moving higher from here than going down. In fact, it still calls for a 75% allocation towards stocks and the remaining in cash. (Please click here to understand how exactly the indicator works.)

The individual stocks on the other hand seem to be telling a different story.

Quite a few of them have hit their stop losses and are waiting to be taken out of the service as per the rules.

Well, we plan to deal with these contradictory signals by listening to what the broader indicator is suggesting.

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S&P BSE SENSEX


Jul 18, 2018 (Close)

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