Hi Hitesh bhai,
What factors you look for when you decide to sell most techno funda bets in case of an overheated market ?
Also basis past meltdowns in market, any particular market signs including chart based you look at when you decided to sell most things and convert to cash even if that means booking some loss ?
Many thanks
Snowman has been range bound between 25 and 70 since 6 years now. In near term it seems to be in a corrective mode, and we need to see when correction gets over. Current price is 50, and 30 WEMA which is rising is at 46. I would consider it once it crosses important resistance level of 70.
@A_shah Selling aspects have been discussed in the past on this very thread. In case of market meltdowns, if its possible to sell off in the initial phase, even if it entails booking losses, it is helpful. But it requires a strong mindset to book losses.
Thanks a lot for a wonderful presentation. Fundamentals will be more clear with mental models.
HI Hitesh Sir, I have learnt a lot by reading from your reply. I can’t explain it in words. You are doing a fantastic work guiding people.
Sir, do you know any book to understand the demand and supply in charts. I feel it helps sometime to study demand and supply.
In common parlance, demand is where support is and supply is where resistance is. And these things are discussed in any technical analysis book.
If you contemplate learning a subject, first try to learn it in totality and then try to specialise in some specific part of it if at all. Idea is not to get trapped in tunnel vision.
Hi Hitesh sir,
Wanted to know your views on Jindal stainless-As SS is of the fastest growing sector and currently doing a lot of capex…But price is now stuck between 460-480 range…Movement is not visible now a days.
I don’t track Jindal stainless fundamentally but the chart presents some interesting patterns and hence posting it here. (disc: not invested, no views)
Near term it has been consolidating in a triangular formation. Need to see which side it breaks out and whether it is a genuine breakout or a false one. Results have been good, so need to see how it reacts next week.
More interesting aspect from learning point of view for me was the earlier breakout above March 23 high of 329 which happened in June 2023. This was a nearly 3 months consolidation below 329 after which stock price broke out above the swing high of 329. This provided a good entry point for someone interested in swing trade.
Even better entry was a "cheat entry(shown in solid blue small horizontal trendline) " ( a term described by Minervini) when stock price broke out above a few days tight consolidation ( VCP) on 7th June 2023. This could have provided an initial entry and then one could have added more on clearing of 329. ( Or could have devised some strategy to suit one’s own trading style)
Stock price has given nearly 50% appreciation since June 2023 . Also note the nearly 12 days tight consolidation near the breakout zone of 329. This was a chance for those with a keen eye to get into the stock, and the chance lasted nearly 12 days.
The chart posted below is of a daily time frame. Something similar can happen in stocks which break out on a longer term time frame. Say in weekly chart, or monthly chart if there is a multi week or multi month breakout, stock price can oscillate above and below breakout level for a few weeks or months respectively. That is the time to do some homework, look at fundamentals wherever possible and then take a call.
Dr Hitesh -thank you for sharing your knowledge. When you say 15-40 % cagr growth for consistent compounders, do you mean the earnings growth or sales growth ?
Dear @hitesh2710 -ji
Just started reading “How to make money in stocks by William J O’Neil”.
In one of the chart he describes sell criteria as follows
“Sell on the way up if prices go above uptrend line on a logarithmic chart plotted over 3 peaks spread out over a period of months”
My query is, in general which chart makes more sense/significance (normal or logarithmic price chart)?
or we have to switch between normal and log chart based on certain conditions/scenario?
Thank you.
Hitesh Sir,
So much noise around the rally & now the expected corrections in small and mid caps.
If one has hefty allocation in small and mid caps then how to handle this situation specially after the correction in this space in last couple of days.
Profit booking is the way or complete exits.
Also, what’s your views on HBL Power after some correction it has seen recently.
Regards
We have had a brutal correction in overall markets since past few days. By now it’s become all too familiar. Whenever these corrections come about, the kind of downward force that is there takes most market participants by surprise. This has happened in the past also and is the case in most corrections.
When these corrections come about is anybody’s guess, and personally I have found them difficult to predict on a consistent basis.
How to negotiate them is often the big question. What I usually do is evaluate my portfolio stocks, and try to weed out the least conviction stocks, both in terms of fundamentals and technicals and try to get into new better options, or increase allocations to existing high conviction bets.
If we take a broader view on overall markets, 18880-18890 was a major top previously. In this correction we have reached those very levels. So logically based on change of polarity principles, we could get support at those levels. Nifty is close to 200 dema at around 18840. So current levels need to be watched for arrest of fall in Nifty and a possible tradeable bounce. Otherwise things can get ugly.
HBL is also in a corrective mode, and has corrected to levels of around 260 from highs of 310. This seems in line with the market correction.
@rmjp Logarithmic scale is used on very long term chart of months and years. For short to medium term, its better to go for normal price charts. While reading William O Neil’s book, (or any other book for that matter) try to focus on the overall learnings rather than getting stuck with a single point. We have to remember that this book was written decades ago, so some things may not apply to today’s markets. But if we get the overall concept described in the book, which is that of getting into stocks with both earnings and price momentum, it should serve us well.
I always have been fundamental guy so far but recently started looking into technical charts more seriously. Basically picking stocks on technical basis and then evaluating whether fundamentally it’s underpriced or not. Can’t thank enough for doing that because all my recent investments are in green even during this maddening carnage.
Sir, do you keep Stop loss (mental or real) for your long term holdings? Do you take exit call based on chart even if Business is Fundamentally Strong? If yes what is your stop loss criteria for long term holdings?
Problem with me is I keep mental stop loss for my long term holdings based on weekly major support and resistance and mark them on charts. But during this kind of market correction majority SL get triggered and I take exit call. And the next day stock bounces back very sharp. Some time we miss good entry price. Ex Sandhar Technologies: SL was at 369 and got triggered since last two day and I have exited. I will take entry again if Stock Breaks Out from Green Line (375) .
My long term holdings usually have very strong conviction based on fundamental research. So in those names, since my holding periods are more (1-3 years) as compared to the short to medium term bets, (of a few weeks to few months) I tend to give these positions long ropes. During the stock’s journey in a 2-3 year period, there will be atleast a couple of occasions when the situation will be close to a technical stop loss being triggered. But in these fundamental picks I tend to rely more on the business performance. Exits if at all are based more on fundamental performance. Unless it is trimming these positions based on some sharp run ups where I feel rally is not sustainable and stock price will need to rest/correct for some time. And the capital is needed elsewhere.
Recent example is of Usha Martin where the head and shoulders pattern I highlighted in the technical analysis thread indicated a trim/sell, but since I feel confident about the business prospects of the company, I am okay to bear the temporary pain of seeing stock price go down. Here I had figured out that according to various moving avg supports, 30 WEMA around 290 , 200 dema around 270 and below that, 252 which is 50% retracement level to previous strong rally were the levels to watch. Today stock price took support around the retracement level mentioned above. Today was again a big bar with big volumes day. These kind of findings are usually seen after a strong rally near peak, or after sharp fall near bottom. If this support indeed holds and stock price rallies, today’s bar will qualify as an important daily bar on daily chart. 308-310 is a gap area on daily charts. disc : holding. added more today.
Hi @hitesh2710
Firstly thanks a ton for the wealth of knowledge that you keep sharing Hitesh bhai. I have picked hbl following you and it has been an almost 3x in less than year timeframe
The way i look at the story now onwards-
Sir, are there any visible indications or patterns on charts that could mean froth, or it is not possible to identify froth on charts, and one has to rely on fundamentals alone to gauge?
Thank you.
Regarding HBL Power, I don’t try to go by management projections. The main thing to know about this business is that it does have strong tailwinds in all its business units. But there can be lumpiness on a quarterly basis. I try not to do crystal ball gazing with relation to its sales, profits or expected returns. Idea is to take things as they come.
On what kind of valuations it gets from markets, its difficult to guess. As long as earnings keep chugging along and tailwinds persist, it makes sense to ride it. There will be sharp rallies and corrections off and on, more so with the kind of markets we are in currently. If one is nimble enough, one can ride these also to do a bit of trading with a part of the position.
@mayank_raghuwanshi I don’t track Motilal Oswal.
Froth in any stock will lead to parabolic moves. These take the form of moves ranging from 50-100% within a few weeks. These kind of rallies are often followed by sharp corrections, or prolonged sideways movements. Sideways movements post parabolic moves are often seen in stocks which hold promise of good future earnings.
But what I have usually seen is that post parabolic moves, most of the upsides are captured, and hence it might make sense to atleast book partial if not full profits. ( there will be exceptions to this too, where post parabolic moves also upsides can materialise)
You can see examples of parabolic moves in stocks like HBL, Som distilleries, Zen tech, etc. One indication with these moves is that the weekly and monthly RSI are well above 80, usually approaching 90, and sometimes cross 90 also. Chances of getting parabolic moves are higher once weekly and monthly RSI cross 70, and trend on the upside. ( this is contrary to conventional wisdom, where very high (above 70) RSI is an indicator of overbought state of affairs) .
Sir, if one were to focus more on the price movement and not give much importance to the fundamentals, or not give any importance at all, as the holding period is shorter, whose works have to be studied? Like Buffett, Lynch who exist for FA, who exist for non-FA?
And in those works which you have read, are there any concepts that have lost relevance, and are not applicable in this day and age? On the same note sir, have you found anything changing in the behavior of the markets, with the increasing use of tech like automation, AI etc?
I ask this because, from what I know, you must have started with FA, and had a long term PF, found TA after FA, moved to more short term bets, taking bigger positions with technofunda approach.
Thank you.
