Newsletter for Jan 17, 2008

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The Nifty yesterday went below our support of 6150 and ended the day quite close to our support line of 6060. There was no newsletter yesterday otherwise the next supports of 6050 and 5980 (marked as trendline B) would have been given. The market, however, has its own mind and it quite convincingly broke through both the supports in the first 30 minutes itself. But it did find support at the next support line (marked as trendline C) at 5830 and reversed from there. The next support zone below 5830 is between 5700 and 5750. Below 5700, we could be in an intermediate downtrend, which would mean a much deeper correction. For tomorrow, the first support and first resistance levels are 5830 and 5970 respectively. A move above 5970 will bring us back to the same resistance levels of 6060 and 6130.

Aban Lloyd, on this daily chart, may have found support in this trading range between 4500 and 5400 and may go back to the top end of the range before long. RSI above 40 even after so much decline is a confidence booster. Aban did go down to a low of 4550 but soon recovered to close at 4790. One can consider buying near 4800 with a stop loss of 4500 and a target between 5250 and 5400 is possible.

On the daily charts, BEML (Bharat Earth Movers) may just have found support at this line. Not completely a risk free trade but the risk to reward ratio is quite low in this. One may consider buying it at around 1600 with a stop below 1550 and a target of 1800 seems achievable. Avoid buying/placing stop in the first half hour of the day. Let the initial euphoria/panic of the market die down.

Bharat Heavy Electricals Ltd. (BHEL) was consolidating in a bearish triangle on its daily chart. This triangle seems to have been broken today. Not only that, a five month old trendline was also broken in the last week, which also suggested weakness. A breakdown from this triangle gives a target of 1900. In a bull market, downside targets may be difficult to achieve but BHEL surely is in a downtrend now. Close long positions. Stay away.

Larsen and Toubro has been inside a trading range (4000-4600) for quite some time now and inside a smaller trading range (4000-4400) for almost 2 months. With a stop loss below 3920, one can consider buying it near the current market price of 3980 for targets of 4400 and 4600.

Happy investing!!!

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Newsletter for Jan 15, 2008

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As seen on this 30 minutes chart of Nifty, it wasn't a day of big movements but it did open down, went up in the morning hours and came down in the afternoon to close at 6174 but the entire day's movement was not enough to take it below our support line of 6150. The RSI is still not presenting a very rosy picture. We are in a short term downtrend which will end when the Nifty goes above 6250. A close below 6110 (or even 6140) will take us to our next support level of 6060.

This daily chart of Educomp shows that it had made a flag pattern in late November/early December, the target for which was given by line B. Note that the length of line B is the same as the length of line A. Now, it turns out that it has made another flag pattern and the target should be the same as the length of line A or line B and is represented by line C. Consider buying above 5000 with a stop loss of 4500 for a target of 5400.

HDFC Bank, on the charts, has made a bullish triangle. In technical terms, a triangle with a top flat is considered to be bullish whereas one with a flat bottom is considered bearish. A breakout from this triangle will be confirmed if HDFC Bank stock price were to close above 1800. This breakout may take place tomorrow. Consider buying above 1800 with a stop loss below 1720 for a target of between 2100-2150. Avoid picking up the stock in the first half hour of the day.

Happy investing!!!

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Newsletter for Jan 14, 2007

On the 30 minutes chart of the Nifty we find that the Nifty found support around the 6150 level trendline, though it stayed below 6150 for about an hour or so. It finally closed the day at stronger levels around 6218. The market going up around closing time is good for the market. But this was not the only good deed that the Nifty has done. It also made a pattern of higher highs, which is marked by the two green arrows. The Nifty should find some resistance at around 6250 and some more at 6350. Its target for the medium term is 6600. In case of weakness, a break below 6140 could take it to 6050.

This pattern of range contraction in this daily chart of Bharti Airtel may soon end. While the volume, the price and the RSI are giving no indication as to which side the prices will break towards, yet a break seems imminent. Such a break with sudden increase in volumes will give an indication about the authentication of the breakout. A break on either side should give a target of Rs.200-250 either side.

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Newsletter for Jan 11, 2008

As predicted in earlier editions of this newsletter, the Nifty did break down today and found support near our support level of 6150. With two trendlines converging at this level, the support becomes stronger. Though, we are in a short term downtrend now, but, at this moment, it seems unlikely that the Nifty will break through this level. It has already been mentioned that we should ignore the movements of the first half hour of the market because that is driven more by what happens in American and Asian markets rather than the Indian situation. However, if this level of 6150 is to break, then it would make the Nifty cheaper by another couple of hundred rupees.

No other stocks analysed today.

Happy investing!!!

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Newsletter for Jan 10, 2008

The Nifty, on the 30 minutes chart, again moved up today upto 6337 before coming down again to close around 6266 levels. The rise once again found resistance near our resistance line, which it once again could not cross. The continuous rise in the Nifty against the continued downtrend in the RSI suggests weakness. As mentioned yesterday, support is likely between 6150-6170 depending on how quickly the Nifty comes down. Another point to note is that while the uptrend line has been broken, yet we are not in a downtrend because the pattern of lower highs and lower lows is yet to form. This may just be a consolidation or a less steeper uptrend instead of a downtrend.

3I Infotech has made a possible inverted head and shoulders pattern on the 60 minutes chart. The target for this pattern is near 163. Consider buying near 154 with a stop below 150 for a target of 163. This chart is for short term traders who are looking for quick entry and quick exit with small profits.

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Newsletter for Jan 09, 2008

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As discussed yesterday, Nifty did break through our support line, which was yesterday at 6260, but finally broke through at 6275. During the last hour of the day, Nifty made a low of 6223 and then came back to our support line (which had now turned resistance) at 6300 and finally ended the day at 6285. This pullback to the resistance line, as discussed in previous editions of the newsletter, is known as a bears' trap or simply a pullback. We expect the Nifty to continue going down with a small support at 6240 and a stronger one around 6170. Below that we could again be looking at 6000 levels (which appears to be less probable, at the moment).


Bartronics, on this 30 minutes chart, looks like it may have found support. None of the indicators, as of now, are suggesting weakness. The stock has clearly been in an uptrend till now and we should assume that this uptrend shall continue. On this basis, it may be a good time to buy the stock. Consider buying above 270 with a stop loss below 265. Try and avoid buying in the first half hour tomorrow.

Larsen and Toubro, seems to have broken out of a trading range after a big upmove in late October. This breaking out of prices is confirmed by the break of the trendline in the RSI too. After the breakout, the target for the stock is close to 4800. One can consider buying it at the current market price of 4340 with a stop below 4150.

McDowell, for a brief moment today, crossed above its 3 months resistance line but then came down to close below it. A surge in volumes today signifies that the price may breakout again tomorrow. However, RSI still being below 60 maybe a sign for worry. But, if the price does breakout tomorrow, the RSI too is bound to cross 60. Try to stay away from it for the first half hour of the day. But if after that it is trading above 2075, consider buying it with a stop below 2000. The target for this breakout may be close to 2370.

Happy Trading!!!

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Newsletter for Jan 08, 2008

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Nifty, as shown in this 30 minutes chart, fails to go up to the upper end of the channel. This is generally known as a return line failure and signifies strength/weakness depending on which side the failure occurs. This means that it is likely that it may not find support at the lower end of the channel this time. While, for the time being, we shall assume that it will find support at 6250-6260, yet we should be prepared for lower levels this time around. The lower levels of support for Nifty are 6157 and 6071.

ICICI Bank has made a pattern, which is not exactly a double bottom pattern, yet, is quite similar to it. It has broken above its resistance line today with a long blue candle with almost three times the volumes and also the RSI has broken above its resistance line. All these are positives for this stock. One can consider buying ICICI Bank at around 1360 with a stop below 1300 for a target of around 1550.

Idea Cellular and its RSI are pushing against their respective resistance lines near 140 and 56 respectively. A long range blue candle tomorrow with heavy volumes should see a breakout in both the price as well as the RSI. Looking at the price and volume pattern more closely, it also looks like a rounding bottom formation. Considering it to be just another pattern gives us a target of 170 while if it is indeed a rounding bottom formation then we can see the price much higher in the next couple of months. Keep a stop loss of 125 for the time being. Buy only above 140. Read the Full Post Here

Newsletter for Jan 07, 2008

Nifty continues to move up but there seems to be no strength in the movement. It is not the kind of swift and easy movement that we have gotten used to. It seems as if the bulls have to put in a lot of effort to make the Nifty to go up. Well, at these levels that is expected. The strength is evident from the RSI too. The Nifty is clearly in an uptrend making new highs while the RSI is unable to surpass its last high. Finally, both the Nifty and the RSI have reached their respective resistance levels. This may lead to a small fall in both prices as well as RSI, though, not necessarily a deep correction. We can expect a decent upmove only when the RSI breaks through its resistance line. Be a buyer above yesterday's highs and a book profits in your longs below yesterdays lows.

Aban Lloyd has made an inverted head and shoulders pattern and has now broken out of it giving us a target of 5800. While it has already gone up by about 300 rupees yesterday, yet another 400 seem to be in the offing. One can consider buying the stock near 5400 with a stop loss of 5050 and wait for a target of 5750-5800.

Financial Technologies seems to have broken out of its downtrend. This is, probably, a good time to buy it from a short to medium term perspective (3-6 months). If things go well, it might give a return of 25-30% from current levels. Keep a stop loss of 2400 for the time being and as the price goes up keep a trailing stop loss.

Praj Industries looks like it is going to move northwards from this point on. A target of 330 seems to be on the cards for this heavy engineering stock. Keep a stop loss of 235 for this purpose and put a trailing stop loss on any price increase.

Reliance Communications, after yesterday's long blue candle, seems to be pushing against the resistance level. The RSI also has made an inverted head and shoulders pattern, which, if broken, will be bullish for the stock. The price chart itself suggests a target of 880 if it is able to cross 770 in a day or two. A stop loss of 700 should be safe, though, even 720 seems to be a support.

Happy Investing!!!

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Newsletter for Jan 3, 2008

Hello.
This 30 minutes chart of Nifty shows that Nifty has broken out of the trading range of 6110-6160 today and closed just above the trading range. The black trendline suggests that the uptrend has been broken. But a break of the trendline does not necessarily mean a change of trend. It can mean either a change of trend or a slowing down of trend. In this case, it has meant a slowing down of trend because the red trendline is still intact. While the target for Nifty remains 6500, yet, minor corrections are expected along the way. Support now is at 6080 and below that at 6020. Expect some minor support around 6160 too.

A lot of work went into the change of format of content on the site and unfortunately, there is no time to view specific stocks now.

More tomorrow. Happy investing. Do click on comments and add whether this format of the newsletter is acceptable or we go back to the earlier format. Your comments are valuable.

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Newsletter for Jan 2, 2008

Hello. Wish you a very happy new year.

Please click on the link below to read the newsletter for Jan 2, 2008.

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