Analysis: RCOM

Today’s pick is RCOM [stockquote]RCOM[/stockquote]. The stock started the year with a very quick up-move which experienced resistance around Rs. 110 levels in Feburary. After a head-and-shoulder top formation, the stock started its down-ward movement to see a bottom of Rs. 50 by September. Since then, the stock has been on an up-move. In the last three months, the stock has moved +54% vs. +7% of the Nifty’s.

RCOM technical analysis chart

Oscillators RSI and CMO are hovering close to the over-bought territory and are suggesting a short-term bearish price action. The stock is close to the upper Bollinger band, which is suggesting a bearish move for the stock as well.

The MACD line and signal line are moving very close to each other unable to suggest any short-term direction. Long-term and short-term GMMA lines are well dispersed and are pointing towards a bullish long-term direction for the scrip.

RCOM correlation chart

RCOM’s average correlation with the Nifty is 0.62 is positive and strong. The scrip will be closely replicating the movement of Nifty. [stockquote]NIFTYBEES[/stockquote]

RCOM volatility chart

RCOM has a historical volatility in the range of 0.4 to 1.0. The scrip’s volatility is currently in the middle of the range.

Given these technicals, we suggest a short-term Sell owing to the little divergence of price with momentum oscillator. A longer term Buy is suggested attributing to the well spread out GMMA lines and current up-trend. However, we suggest having trailing stop-losses in place, in case trend-reversal were to take place.

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