Category Archives: Equity

Technical analysis on various equity stocks, Latest view on equity markets.

What to do now???

Hello Friends,

Today I got a chance to speak to one of the subscriber of Gann Square of Nine Method. It seems in last couple of days he lost his hard earned money and obviously now he was in search of some black box system which should work in all market scenario. He asked me few questions and i thought this questions are not only his questions, but in general all the participants must be thinking in the same way. Hence this article.

  • Friends, first look at this chart Nifty. I had nothing but drawn a simple trendline from the lows of Jan 2016 and adjoined to next two important swing lows, out of which one trendline is already broken and another is about to test in days to come, or God Knows if it will tested just today itself. Point of support based on this trendline is somewhere near 10180.
  • Secondly, on chart 14-pd RSI is plotted on down, where one may clearly see that RSI has broken the previous swing low, whereas price has not which is 9951. So in technical terms it is called as Hidden Bullish Divergence. Which indicates that after tremendous selling pressure possibility of pullback can’t be overruled.
  • Next one may see INDIA VIX which has made a high of 20.48 and lastly settled at 19.73.  On 8th Feb,18 it made a high of 24.035 wherein from it cooled-off. Importantly if we see in past, even after VIX cools-off from the highs, prices may continue to decline initially and after few days it starts recovering. So, it is better to assume that INDIA VIX may initially rise and eventually it starts cooling-off but that does not indicate bottom reversal.
  • And lastly one more important observation, If we see Average Range of Nifty, it has shot up dramatically, and it is not only Index but Average Range of most of the stocks has tripled, which is not obvious.

Now, how to interpret this data and how to poise ourself in the market. First and foremost you have to decide, why you are in the market,

  • For Excitement and Thrill
  • For taking Revenge
  • For making Money

If your answer is 1 or 2 then you are most welcome and enjoy the ride, but if your answer is 3 than my sincere suggestion is to wait for a while, no matter how good you are or bad your system is. Mostly none of the system discounts such a high volatility with such a wide Average Range. Take your prudent judgement and save your money from big time loss. If you are Investor than start accumulating selected stocks in a staggered manner. And if you are Trader than Just Relax, wait for VIX to come in its territory and wait for Average Range to switch to normal course.

Friends, i can give you couple of other points of analysis, but don’t want to confuse you much. I try to keep it simple. If you have any query feel free to ask me. I will answer you for sure.

L& T Technical Analysis as on 26 Apr’13 – 1540.85

L&T as on 26 Apr'13 - 1540.85

L&T as on 26 Apr’13 – 1540.85

Larsen & Toubro Ltd is moving consistently moving higher after posting a bottom of 1313 on 9 Apr’13. In last 11 trading session L&T made a gain of more than 17%. Yes, whopping 17% gain. Lastly stand at 1540 reached near a point where multiple resistance pivots will come in play.

But, we should notice some important points here.

  • From beginning of 2012 L&T is making higher highs and higher lows.
  • After posting 1720 in end of Oct’12 prices were moving with weak bias, and lastly on 9 Apr’13 it made a low of 1313. This was loss of around 23% in more than 5 months. And we witnessed gains of 17% in matter of 11 trading sessions only.
  • As it is marked in attached chart, momentum oscillator RSI (14)  gave clear indication with forming Positive Divergence between price and oscillator. And lastly RSI (14) gave a minor Negative Divergence, but still it is very early to comment on it, as this divergence can be easily negated.
  • From last Monday onwards, prices are moving above its 200-day EMA, and with that prices also moved out from Falling Channel line.

From above observation, I sense that still there is scope for L&T to move higher, subject to, prices holds above this 1550 levels where multiple resistance comes as hurdle to prices, and according to my observation, Nifty and Bank Nifty may witness minor pullback in days to come. So it can be threat for L&T too. As long as L&T holds above 1490 level, I would like to maintain my bullish stance on it. Of course risk is involved, but if L&T holds above this level than it has potential to go much higher.

Alternatively, below 1490 prices may enter into consolidating phase and start weakening, but weakness will be confirmed below 1450 levels.

At this point in time, both possibilities have an equal chance to run its course. So we don’t have a choice, but to take risk or keep close eye on it.

Dear readers, please share your view with me, whether you like my articles or don’t like, it add value to your trading? Because I believe in saying what I feel, I never cut, copy and paste any articles, and never try to misguide anyone. Your opinion is important to me, please come ahead and share.

 

Reliance Infra – Technical Trading Strategy

reliance infra

Reliance Infra

Reliance Infra as on 22 April 2013 – 382.45

In the last session prices moved sharply higher. I sense that this rally will continue, based on my technical observations.

Trading Strategy –

Ideally, due to yesterday sharp rise we should wait for better entry level in Reliance Infra, near 373-375 level (cash), with this buy trader can put stop loss below 355. Initial target is around 415.

Or alternatively,

Traders can Buy Rel Infra call option of 400 strike price for next month expiry, which is lastly closed at 15.90.  Don’t jump to buy, as premiums are high at this level, enter near 12-13 range, and based on cash level. Stop loss will be 355 only.

Technical analysis on Tata Motors.

Tata Motors as on 18 Apr’13 – 282.45

Tata Motors as on 18 Apr’13 – 282.45

As It can be seen in attached chart, Tata motors has made a low of 203 in end of July’12, and since from then making higher tops and higher bottom up till Jan’13 where it made a high of 337.40, notably which is higher than life time high of 320.75 made in Apr’12.  From Jan’13 price corrected exactly 61.8% last up leg from low of 203 to high of 337.40.

From last two weeks after making a low of 251.80 (61.8% Fibonacci Retracement) prices are moving higher on gradual note. In the last session we saw spectacular move where prices moved sharply higher.

According to my observation, Tata motors will continue to move higher. Undoubtedly, it has to cross some strong resistances in between, but I believe broader market can retest its highs, in such scenario Tata motors can also move higher.

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Infosys crash down was surprise for you?

On last Friday every market person was talking about Infosys Ltd., every blog was ready to encash on the name of Infosys. Some analyst were really very frustrated because of such unexpected fall, might be they must be long on the counter. Yes, I received few calls on Infosys to go long also, but anyways it has fallen.

Dear friends, before moving ahead let me confess that even I had not expected such sharp fall. But with this disclaimer let me move ahead.  In my last post on 5th Apr’13, I have clearly mentioned that Infosys – Weakness Expected (you can click here).

Point I am trying to make is, Technical analysis study has already alerted about underlying weakness in prices, and which was quite evident on Infosys and CNX IT.

In fact I was casually going through my past posts and checking out my performance, and I am really glad to say that I am on a right track with an excellent strike rate. Although I become lazy many a times, and don’t care to write article on my blog, but whatever I have given I have done with due respect to my subject and achieved good results.

I know critics can doubt on my argument, but you can check my past post, and I am sure my critics will become my fan one day.

Infosys – weakness expected

CNX IT Index as on 05 Apr'13 - 7047.35

CNX IT Index as on 05 Apr’13 – 7047.35

Infosys Ltd as on 05 Apr'13- 2865.85

Infosys Ltd as on 05 Apr’13- 2865.85

CNX IT Index and Infosys both charts looks similar to each other, like they both are twins.

I sense that CNX IT Index and Infosys will correct from here.

Below 2820 infosys will confirm its weakness and can move lower. Initially it may find support in the range of 2790 to 2760, and consolidate there.

Trading strategy could be, Buy Puts for Infosys with stop loss of 3000.

CNX IT will confirm its weakness below ~7000 mark, so keep watch on it.

 

 

 

Trendline can make wonders!!!

Yes friends, it happens that we forego simplicity and strive for more and more complex scenarios & solutions.  Beneath this mentality, human nature lies which discard the simple in favor of complicated. (More difficult to understand, more accurate will be analysis??) Personally, I don’t believe that complexity can give you better solutions every time.  You also have to look in for put in efforts and reward, that is what I understand; look for risk(time)-reward ratio man…

We are thought and also we have observed that some simple technical tools can do wonders and can give you an excellent, out of many simple tool, one is Trendlines. Trendlines are one of the most dynamic & versatile tool to apply in the analysis.  Despite being extremely useful, trendlines are often overlooked.

NIFTY-WAY2PROFITS

NIFTY AS ON 30/01/2013

I have applied trendline in below attached chart of Nifty, which itself speaks thousand words than I can write here, and you don’t need to be expert to understand from visual presentation.  As we can see Nifty is moving in an uptrend from mid May’12.  I have drawn rising trendline from the low of 4770.35, and adjoin it to the next immediate higher low of 5032.40, that’s it, after that I have only extended the line, and you can see how swiftly this trendline was respected, prices took support on this trendline, twice then after.

Now second observation- recently prices has formed a channel, where prices moved in a range, where it touches upper boundary of line and again retraces back to lower boundary.  Although, on Nifty this range is very small, but as you can see it is trading it.  Basically, prices are moving in a rising congestion, and breakout from this congestion is quite obvious, can you stay in a single room, when you are use to stay in one large apartment?  Obviously answer is no, you have to make compromises, and that is exactly what is happening with prices, one or another day compromise ends, and prices can blast.  Now, don’t ask me in which direction, you yourself guess and understand, do I need to answer your question.

Lastly, third observation which I like to highlight here is, just look at momentum oscillator RSI (14) there is clear cut divergence between prices and oscillator, which clearly indicates that momentum is not in tandem with price rise, alternatively, momentum is declining as prices are rising, such situation does not holds for long, either prices or momentum has to make compromise, let’s see who does?

Now let me give you a clue, once prices moved out from rising channel, you should be on alert, and if it breaks below than wait for day or two and initiate short position. Here let me speak some wise words….Never pre-empt the market, ask the question to market, rather asking to anyone, and I am sure it will give you answer.  I hope now you got the answer….hmmm

Eight reasons to visit my blog…

Let me put it this way, why you are here for now?

  • One possibility, you may very well know me,
  • second possibility, you must be searching for something and accidently you click on an article and you are here.
  • Lastly, I believe you are passionate about Technical Analysis.

From the give three broad reasons, you are here and reading my blog.  Now question comes do my write up attracts you or not? Why you should come again and revisit my blog, than let me give you eight reasons to revisit my blog.

If you are trading Indian Equity markets, than I am sharing my views here.  Like I have shared this-

If you are trading Agri-Commodities and Precious metals, than here I share clear views on highly traded commodities.

If you are Forex player, than I also share my views on Global Forex pairs, as well Indian Forex pairs.  Like I have shared this-

If you are looking for medium to long term price forecasting on any given asset class, than please share with me, as I can share my posts on requests, which is not published directly on this blog (don’t worry it is not charged)

If you are Jobber or scalper than in this blog I share trading strategies which are very much useful for intraday trading.  Like I have shared this-

If you are a learner, aspirant technical analyst, than you will get many things to learn from articles.

As my reader knows very well that I share my views on market in very straight forward manner, with applied strategy, while keeping ambiguity aside (sometimes you can’t do anything when market tells you No to do anything), and I promise to do in same fashion in future also.

M&M – Selling Opportunity???

Currently Mah&Mah is trading near 930.

Technically, it has broken its rising trendline, and momentum is waning.  M&M witnessed sharp rally from 620 odd levels to recent 975; in last 4 odd months trendline is respected and prices witnessed bounce thereon, this time trendline is broken and it seems that prices will fall further.

Mah&Mah

Mah&Mah

I agree that long term investor will not agree with me, to go short on M&M because on broader level picture is still rosy, and I will totally agree with them.  What I see is trading opportunity to go short on M&M at current levels, keeping stop loss of 955, with 1st target would be around 890 levels.

Today Nifty gave Dark Cloud Cover, indicating weakness in Nifty.

Gail – 354

At current price Gas Authority of India Ltd is trading at 354.

Technically, stock is trading very close to its Major 200 Day Simple Moving Average (DSMA) since from few days.  Momentum oscillator MACD is trading with Bullish Convergence, whereas ADX has reached 19 levels, which indicates that momentum has not picked up from last few days.

GAIL - 354

                                                            GAIL – 354

I see here a buying opportunity, as MACD is about to reach “0” line from below, and I expect momentum to pick up gradually.  Also stock is just trading below 200 DSMA, so as momentum will pick up stock will shoot up.  On flipside, if this hypothesis goes wrong than, it is very much possible that stock will move down quickly, and to support that fact we can see Death Crossover taking place (50 DSMA crossing 200 DSMA from above).

Keeping above things in consideration, I advise to initiate long above 360 level keeping stop below 349, eventually I see prices to test 385+ levels.  Risk-averse traders can wait for close above 360.

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