The current market conditions are more suitable for traders as selective stocks from few sectors have been zooming up while other stocks, especially from the new economy, have been languishing. However, investors may also benefit if they pick up stocks from the right sector.

To be a successful trader, we must master all three of the key aspects of the trading process. The three basic elements are: 1. Analysis 2. Money Management and 3. Psychology.

Analysis: There are variety of approaches available. a) Pure Fundamentals, b) Quants or statistical evidence, c) Pure Technicals, d) Hybrids or the mix of the three.

Money management: covers the area of how many trades to make and even more importantly, how large each trade must be. Under trading will restrict profit potential, while overtrading is extremely fatal. Our first concern is to remain in the game preservation of capital. Even when our risk management is sound, we can loose through faulty trade strategy. Our objective must be to avoid large losses and to expose our capital to the opportunity to make large gains. Thus we will "keep looses small and let profits run". The sad part is most losing traders do exactly the opposite - take profits as soon as they appear and procrastinate on closing out losing positions. This leads to the third element.

Psychology: This includes the key concepts of managing emotions and making decisions. Trading is a very emotional experience and this is one of the reasons why practicing on paper is only effective up to a point. Once real money is involved, the key psychological element of fear, greed and ego all come into play to sabotage the best of plans. It is not difficult to come up with a good plan for trading the markets. However, it is inordinately difficult to follow the plan. Most losses are not the result of poor plan, but the failure to follow it.

I have been tracking only those sectors which may be bottoming out and which are poised to give traders and investors good returns in the next few months. Today I will look at a few stocks from the cement sector. A few stocks from this sector have been zooming ahead with a rise in volume and investors can pick up long positions in a few of these stocks when they go into a correction in the next few weeks. The relative strength lines of many of these stocks have improved quite a lot as stocks have been moving up while indices continue to languish.

ACC
ACC has been moving up smartly since it formed an intermediate bottom in mid-October. The stock has come very close to its earlier intermediate top of 128.10 and a close above it in the current intermediate rise will confirm a major uptrend. The stock has already moved above its 30 WMA and the relative strength line for it has started to close above its trigger line which means that the major trend will soon be confirmed as up and that it is already outperforming the indices. Traders who have picked up the stock at lower levels can convert it into investments while more long positions in can be picked up investors in the next intermediate downtrend, ie when the stock pulls back towards its 30 WMA. The current activity in the stock has been with a strong rise in volume, which is a bullish sign.

Gujarat Ambuja
Gujarat Ambuja has been in an intermediate uptrend, but the stock is still well below its falling 30 WMA and will require quite some time to move into an intermediate uptrend. This means that the stock will require some more time to bottom out and even if it goes into a major uptrend in the next few months, investors must concentrate only on the leader and Gujarat Ambuja is certainly not leading the current rise in the cement sector. Thus, investors must stay away from the stock and must only trade on the long side. The relative strength line for the stock is still well below its trigger line and only the volume suggest that we may soon see a bottom for it. But as the stock is not one of the leaders now, pick up the leaders only.

India Cement
There has been a rise in the activity in many cement stocks, especially in the forward section. India Cement is still below its falling 30 WMA and has yet to confirm a major uptrend. The relative strength line for the stock is moving towards its trigger line and will soon cross it once the bottoming process for it is over. However, as the bottoming process is not yet over, investors must just keep a track of the stock and get in probably when it exhibits a higher intermediate bottom. Till such time trade the stock on thelong side.

Madras Cement
Madras Cement has bottomed out quite some time back as the stock has been trading above its 30 WMA and has been exhibiting ascending intermediate tops and bottoms. The relative strength line has moved above its trigger line.

The next strong resistance to the stock is at the ascending trendline from the earlier intermediate tops and once the stock crosses this trendline, higher levels in the stock will be seen. The stock will also gain quite some momentum after crossing the trendline. Investors must hold on to the stock and must add more long positions in the next intermediate correction.

Kesoram Industries
Kesoram Industries has also seen a rise in the activity in the stock for quite some time now. The trading volumes has been quite high which is a bullish sign. The stock has moved above its 30 WMA and is very close to its earlier intermediate top. The major trend of the stock will soon be confirmed as up and higher levels in the stock will be seen in the next intermediate rise.

Investors must take up fresh long positions in the stock when it pulls back towards its 30 WMA in the next intermediate downtrend. The relative strength line for the stock has moved above its trigger line suggesting that it is outperforming the indices.

Grasim Industries
Grasim Industries is in an intermediate uptrend but the stock is still below its falling 30 WMA and its earlier intermediate top. Hence, the major trend of the stock is down. The relative strength line for the stock is moving towards its trigger line but is still below it.

This means that the stock will require some more time to bottom out and a higher intermediate bottom will be a better opportunity for the investors and traders to pick up long positions in the stock. The stock is not one of the leading stocks currently and any trading on the long side is more advisable.