HI Piktohit,
Excellent explanation even I follow similar setup, I most of the time prefer price squeeze near the resistance level before breakout, Since I look for short term I also want the price to be above 50 DMA.
regards,
Chethan
In market observations one needs to see what is the current fancied sector. GIC Hsg seems to be in one of those sectors. PNB HF has had a one way rally over the past few days. Plus most other financials seem to be showing some strength, with reducing numbers of Covid patients. So although there are overhead resistances, I feel GIC has undergone enough consolidation at lower levels to provide impetus to upmove.
Same logic goes for Sanghi Inds. Results date of 10 th June has been annonced for q4 fy 21 results. So I would like to see the price action till that time and then take an appropriate call.
All these kinds of positions are pure trading positions with well defined entry and exit points. And while we do have a cursory look at the fundamentals of the company, the main focus is on chart pattern. These kinds of patterns are suitable for momentum trading.
Best momentum is usually seen in stocks which are consolidating just below or close to or slightly above all time highs. I have been observing 3 M India in that category. Its stock price is doing all the right things near previous ATH. But as of now no position but remains in my watchlist.
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BPCL has been in 240-550 channel for last 5-6 years
In shorter duration we can see Cup and handle/ VCP pattern. Breakout above 480-490 and Bigger move will be on crossing 550
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Thank you Hitesh for the clear thought process. I usually tend to go for ATH or 52 Week either on break out or wait for pull back for better risk reward. Also I like some kind of VCP kind of pattern
VSSL
Vardhman Special Steels is engaged in manufacturing of Billets, Steel bars & Rods and Bright Bars of various categories of special and alloy steels.Leader in the steel bar producers for automotive applications.
Company has reported good quarterly results.It caters to Toyota, HeroMoto Corp, Caterpillar, Maruti, Bajaj and Hyundai.
Price Broke out with good volumes and touched the ATH level of 217.
After that its in consolidating in tight-range around 20-day EMA in with volume contraction.
As both the Auto and Steel sector are doing good, I am slowly accumulating as anticipation breakout trade.
REC has a good structure here. Not an all time high but almost a 2 year high, breaking out of a textbook Cup and handle with high volumes.
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Power names looking interesting- Torrent Power gave a Cup and handle breakout and then retested. Move is continuing with high vols
CESC another interesting chart
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Hotel stocks in general seem to have broken out from flag like or other bullish pattern formation and seem to be in consolidation post that breakout. These are the kind of names that are typical of the UNLOCK trades. Since long they have been under pressure due to Covid second wave and now that the impact of second wave seems to be receding, sentiments for these stocks could improve. Again these are positional trades with well defined stop loss and targets. ( trader/investor himself has to follow their own stop losses and targets if they want to consider positions. I am posting these charts as I find them to be very interesting and following classical patterns. )
Taj gvk chart. cmp 145. Note flag formation post a gap up breakout. And a subsequent breakout from flag pattern and now consolidation.
EI Hotels. cmp 115. Two interesting cup and handle patterns. A smaller one at the right side of chart. And this smaller cup and handle forms a handle of a bigger cup and handle pattern.
disc: invested as a trading bet in both eih and taj gvk.
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Indian hotels cmp 135. Stock price tried to get above its neckline at 132 of a cup and handle pattern back in Feb 2021. But failed to cross it probably due to nervousness associated with second wave of covid. It fell to levels of 95, and then started climbing steadily and crossed 132 successfully and has been consolidating above 132 since past few trading sessions
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Maithan alloys has a lot going for it with strong increase in silico managanese prices. Today stock price crossed its previous all time high of 1026 posted in Jan 2018. Since that top stock price hit bottom of 289 and has formed a nice rounding pattern on medium to long term chart. Depth of rounding bottom is around 700 Rs. Breakout past all time high does not mean we buy it immediately. It should be added to watchlist to find an opportune entry point based on one’s own trading methods.
A horizontal line drawn at 700 shows an important pivot. That seemed to be an important marker of trend change.
disc: invested as a techno funda bet.
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ICIL - indo count industries ltd is a home textile exporter from India. Company’s main products include bedsheets and all related products. Main destination of exports is USA. In q4 fy 21 concall, management has guided for 20% volume growth in FY 22 over FY 21. Textile exports from India to US seems to be having strong tailwinds. Risk remains the availability of containers for exports and variations in raw material prices.
Attached chart shows a 4 year breakout above 172. This has happend in the form of a cup and handle breakout, where the handle has assumed the shape of a nice rounding bottom which ranged from 113 to 172. In second week of June 2021 it broke out of the 4 year highs to post a high of 178 and subsequently underwent 4 weeks (18 trading sessions) of tight consolidation between 163 to 179. Last week it broke out from this consolidation and posted a high of 192 and closed at 183.
Coming to possible targets, the rounding bottom formation (handle range from 113 to 173, a height of 60 Rs and added to breakout point of 173, comes to 230 ) breakout target comes to 230 kind of levels and the cup and handle breakout target comes to around 310. (range from 30 rs to 170 rs which is a distance of 140 rs and this added to breakout point of 170 comes to 310).
Note: Other textile sector stocks also are showing good bullish patterns and breakouts.
disc: invested as a techno funda medium term bet. This is not a recommendation and shared purely for educational purpose.
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TRIDENT. another home textiles exporter. Here we can clearly see examples of gaps discussed in my portfolio thread.
First gap marked in light blue dotted lines ranges from 10.95 to 11.15. This was an important breakout gap where the stock price gapped up above the previous all time high of 10.95 posted in July 2017. (crossing 4 year highs which was previously all time high) Since this was a breakout gap, there was no attempt at even filling this gap as the stock price raced ahead sharply.
Second gap is a run away gap between 15.25 to 15.9 marked in dotted green lines. This gap occured during breakout from a triangular consolidation which took the shape of a pennant (flag) post the run up from 8 to 17. Again this gap acted as a strong support during declines post breakout from the trianglular consolidation. This gap remains unfilled till date.
Now coming to targets of the flag (or one can call it pennant ) pattern. Height of pattern is from 8 to 17 which is a distance of 9 Rs. Breakout point was 15.25. Target could be 15.25 + 9 = 24.25, if pattern plays out.
disc: invested as a techno funda bet. (two stock basket approach comprising of ICIL and Trident to play home textiles segment ) This chart has been put up for educational purpose specifically to understand the importance of gap at very important breakouts.
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Grasim is showing volume contraction pattern from Mark Minervini book…
We are probably in 4th contraction and prices might go up significantly
Again both Fabric and Cement - Quarter performance was good
Many triggers but later in the year or towards next year like Lubrizol viscose etc.
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Longish posts but I have only selected the best charts in my opinion.
Starting with a broad view on Nifty and Bank nifty
Nifty at interesting position now. But volumes have been pretty low in many of the Nifty50 names. Also, there is a negative RSI divergence. So time to be a little cautious
Banks looking good at this point. Bank nifty has been a big laggard. Maybe its time for it to perform. Today was a trendline breakout. So a good time to look at some banks. Few charts that I find interesting
SBI- Cup and handle
ICICI Bank Cup and handle at all time highs
Axis Bank
SBILIFE Cup and handle and near all time highs
Apart from Banks, few other interesting ones
L&T
Bajaj Auto
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@hitesh2710 Sir, given that in technofunda, one cannot ignore the ‘funda’ aspect, what is your view regarding the governance and accounting practices? This article talks about the warrants, revaluation, revenue recognition, remuneration etc.
Disc: Not holding. I am not making any allegations.
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If you dig deep enough, you will find atleast a few negatives on any company. Its up to us what to take seriously and what to ignore. Issuing of warrants and their conversion has been a sore point with a lot of academic type of investors. I would like to see if the promoters have kept holding on to the warrants they converted or have been doing trading in their own shares off and on. Plus are these antics repeated off and on or whether that event was a one off.
I am not a big fan of digging to the point of paralysis. Too much analysis in my view often leads to paralysis. There are others who cannot think of investing without a deep dive and they may be right according to their own method.
But according to my style of investment, digging too much is often harmful and hence I tend to avoid it.
Plus these techno funda bets are not buy and forget kind of bets. There are well defined entry and exit triggers which I follow rigorously and anyone contemplating momentum investing also needs to follow. Each person will have modifications in their strategy but there should atleast be a strategy in place.
I had seen a similar kind of hullabaloo regarding warrants allocation in the case of Mayur uniquoters. The purists kept raising the issue of warrant issue and conversion which was quite dated and were worried about these things. My focus was on the company’s financial performance.
While analysing a company we need to look at the whole picture and not get stuck with only one or two points. It would be akin to missing the forest for the trees.
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