Thursday, September 13, 2007

The Great Wall

Its more like a continuation of yesterdays' post. Markets seem to have walls built at 4535 and 4580 just playing tetris between them. The best thing to do now is to watch and watch for the right direction. Volumes have been low in the past few days. Everyone seems to be waiting for 18th. We will also wait for 18th.

As said earlier, we will keep trading light. Reliance capital hit the roof today as suggested yesterday. The other 2 failed to take off. We will track a few stocks for tomorrow only

1. ICICI bank - Good support at 882. BUY above this level for following targets - 898, 912, 920. If ICICI breaks 882, short it for a target of 872.

2. PATNI - SHORT on break of 449. Target 442, 440. SL - 457.

Wednesday, September 12, 2007

Intraday calls for 13th September

Markets are getting extremely rangebound. Though we still continue to remain positive, chances are it may just go the opposite way as well. Market is giving no indications of a directional move and has been trading sideways for many days now. Its better to trade intraday in these market conditions than positional. The action is also very stock specific. We will pick up a few of these alone and keep trading light for the next few days until the direction becomes clear

1. Reliance Capital - Good momentum and upmove in this stock. BUY for a target of 1389. Stoploss 1300.

2. UTV soft - BUY above 582 for a target of 594.

3. ZEE Telefilms - Bounced from 299 levels exactly as suggested yesterday. For tomorrow, BUY above 310 for a target of 319. If it manages to close above 310, positional trades can be done for higher targets.

Tuesday, September 11, 2007

Market Update...

Market is still trading sideways and is not giving a clear indication of the direction it is bound to take. Volumes have been low in the past few days suggesting, a lot of money is waiting on the sidelines perhaps for the Fed decision on the 18th. Till the direction is clear, try to keep very less overnight positions. Markets are taking good support at 4470 and above level. I did write about the possible re-test of 4400 before moving up, we will have to wait and see if it can happen. The short term support can be raised to 4450 level. Once NIFTY crosses 4550 market will run above 4600 easily. This is becoming a very difficult level to break and we are time and again facing stiff resistance at 4535. If 4550 is taken out, go long with confidence.
Here are some stocks to watch for tomorrow and their levels.

1) ASHOK LEYLAND - Short on break of 36.9. Expect a good fall from here. Alternatively you can buy from here

2) PRAJ INDUSTRIES - Short on break of 210. This stock is a short term buy and is possibly forming a round bottom pattern. A highly bullish pattern in the making.

3) RCOM - Possible positive breakout above 550. First resistance at 555. Above that it will fly.

4) TISCO - Resistance at 727 and 732.

5) ZEEL - Bounce from 299 likely. On the downside, support at 285

6) INFOSYS - 1816 is crucial level. Breakdown will result in a greater fall.
All IT stocks seem to be falling relentlessly. The IT sector is currently "underweight" avoid long positions in IT stocks.

7) NDTV - If NDTV can take out 374, it will move to 377. If 377 is also taken out it will fly from there.

8) Nagarjuna construction - 222 - 225 is a good resistance zone. Buy above 225.

9) MOSER BAER - Above 319 will move up smartly.

10) TELCO - This has been an underperformer in this rally. If it breaks 688 tomorrow, it will fall until 661.

Investment Picks
------------------
ESCORTS - ESCORTS has bottomed out well and the stock is poised to move up well in the current run. The stock is currently trading at 107 levels and should be able to reach upto 137 levels in the coming weeks. That will be a good 30% return. Time frame - 1 - 3 month

Sunday, September 9, 2007

Education: Supports and Resistances

Starting this week, we will see some of the important concepts that one need to learn to be a successful trader. We will start these with an article on the concept of supports and resistances

Supports and resistances offer important clues in technical analysis to figure out when to enter a stock and when to exit one. Typically, a break of support is a bearish signal and signals that one should exit a stock. A resistance break signals that the stock is poised to move up further. While these may not be the only signals based on which, one decides to enter or exit a stock, these are 2 very important pieces of information. Lets look a little deeper into these.

A support area is typically an area where demand is more than supply, thus it "supports" the stock from any fall in price. A "resistance" is a point where the supply is more than demand and hence the stock struggles to move up further. Analysts, use past data to figure out support and resistances for a particular stock.

An important point to note here is that, when a support is broken and the stock moves down, the same spot acts as a resistance at a later rally when the stock tries to move up. The converse applies for resistance. A broken resistance level acts as a support during a later correction.

The below chart shows data of SBI over a period of time. The horizontal red line indicates a price level where the demand-supply tug of war is maximum indicating presence of a support/resistance. Note how the stock has moved drastically on either side once the level has been taken out.



Determining support and resistances
Supports and resistances can be determined by drawing lines connecting any 2 points in a price chart. The more the number of points, the more it confirms the existence of a support/resistance area. When picking up points to draw your lines, you should look for key reversal areas in the chart.

The week starting...Sep 10th 2007

The US markets got beaten badly on friday. A bad cue to start the week with. We have broken down from the broadening formation on hourly charts. As indicated in the earlier post, this is a bearish pattern. Important NIFTY levels to watch out for 4470, 4460, 4400, 4350. We should have a gap down opening on monday. Its better to play the wait and watch game. The short term trend is still up. The volatility still doesnt seem to be dying down. Expect a bounce from one of these levels on monday. If these are broken decisively, we will be breaking away from our short term uptrend.

Play the wait and watch game on monday. We will pick up stocks as they become ripe to buy. We will wait for one day to get into the right direction. Remember there is no rule that you should trade everyday. Sometimes its better to wait it in the sidelines and watch the action.

We will stick to the following calls for 1 day only. Based on mondays' close, we will devise trading strategy for the coming days.

India cement - Short on break of 254. Target 247. Target 2 - 242

Zee - Below 298 will crash. Target 1 - 278. Minor support at 288, 281. If it manages to stay above 300 and closes here, we can buy again for coming days.

SBI - Its resting at 1616. Has looked to break 1800+. Will be interesting to see if it manages to stay near this level.

RPL - 119 - 116 is a good support range. A maximum dip of upto 110 is slightly possible. The trend is still up. Use dips to build positions in this stock.

UNION BANK - I dont expect this stock to fall below 133 tomorrow. Use gap down opening to buy at intraday lows. There is excellent support at 133. First support at 140. 135 is also the 200DMA. Buy around 133 - 135 range tomorrow for intraday.

Data on institutional trade shows that even when market broke down from the trading channel, FIIs were net buyers over the past few days. Strongly suggesting, that the trend is still up. Do some bottom fishing on monday. NIFTY can dip upto 4400 or slightly below and bounce back.

If you need advise on some specific stock, leave your mail ID and a message, I will get back to you with my analysis.

The week ended...Sep 7th 2007

Last week was excellent. The following is the follow up to last weeks' calls.

Arvind mill - Crossed both targets
Ashok Leyland - Not enough momentum, but target 1 still crossed
Escorts - Target 2 achieved
IDFC - we gave a target of 137, it reached 136. Good profits here too
TCS - No trade. Could not break 1075 decisively.
Reliance communication - While the level 544 was breached, hardly any momentum to reach 555. However made a mid-week high of 550
SBI - Broke 1617 and raced to 1653. But market pulled it down on friday. Nevertheless, it was profit for the week and it has closed exactly at out level of 1617 for the week.
Tata motors - Stop Loss triggered.
Zee Telefilms - Target 2 achieved
IFCI - Target achieved on day one itself
SRF - Target given 145-150. Reached a high of 147 on friday.
IVRCL - Broke 400 as given, but came back to 390 levels.
CIPLA - Not enough mometum, but it went to 187 straight from 181, we booked a profit of 6rs per lot.
IDBI - For those picked up at 130, it was an excellent week. It moved up till 140. We are still positive on this counter and has the potential to break 150 soon.

Overall it was a fantastic week to cherish. Hope you all made good money.