Author: Abhishek

Analysis: RAYMOND

Today’s pick is [stockquote]RAYMOND[/stockquote]. The stock has made a 12% since the Rs. 335 levels of last October.

The up-trend since January this year has seen resistance around the 420 levels a few times. The stock has seen many corrections in the last one year, and is trading above the near-term support of 340.

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Oscillators RSI and CMO are at currently at 53 and -4. At this level of RSI, the stock has to decide on which way to go. CMO doesn’t suggest an imminent move either.

The MACD and signal lines are closing in. The histogram levels are on a decline suggesting a possibility of an up-move.

The GMMA chart for the stock is not suggesting a directional move, one way or the other. The short-term lines are very close to each other and the long-term lines are entangled.

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Raymond’s average correlation of 0.57 with the Niftybees is positive and strong. At this level, the stock will not replicate the Niftybees. [stockquote]NIFTYBEES[/stockquote]

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Raymond has a historical volatility in the range of 0.4 to 0.8. The scrip’s volatility is currently on a decline because of the consolidation phase the stock is undergoing.

Looking at these technicals, it appears that the stock is presently in the consolidation territory. A short-term hold is suggested. For the long-term outlook of the scrip, watch the long-term GMMA lines to surface a trend.

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Weekly Recap

NIFTY.2012-10-22.2012-10-26

The NIFTY ended tepid, moving just -0.12% for the week.
Biggest losers were PNB (-8.91%), JINDALSTEL (-5.25%) and POWERGRID (-4.65%).
And the biggest winners were M&M (+6.94%), LT (+4.67%) and IDFC (+3.78%).
Decliners eclipsed advancers 29 vs 21fii.2012-10-22.2012-10-26
Gold: -1.67%, Banks: +0.13%. Infrastructure: -0.58%,
Net FII flows for the week: $166.43 mm (Equity) and $459.15 mm (Debt)
Net domestic institutional flows for the week: – $198.20 mm (Equity) and – $238.30 mm (Debt)
Daily news summaries are here.

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Analysis: ASIANPAINT

Today’s pick is [stockquote]ASIANPAINT[/stockquote]. The stock has made a 24% since the 3130 levels of October 2011.

The up-trend since January this year has seen resistance around the 4000 levels twice already; this will act as a near-term resistance level. The longer-term chart shows a support around 2500.

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The stock is currently exhibiting a long-term flag formation. A decisive breakout above the 4000 levels can initiate the next leg of up-trend.

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Oscillators RSI and CMO are at currently at 52 and 6. At this mid-level RSI, the stock has still got around 20 points to reach either oversold or overbought levels. The current mid-range CMO is also unable to suggest any imminent move.

MACD line and signal line are also getting in a twist. The static histogram levels are adding onto the trendless-ness of the scrip.

The GMMA chart although seems to direct a good news for the long-term. The short-term lines are very close to each other and not directing anything, but the expanding long-term lines are giving out a good cue for the scrip. A continuity of the same behavior will decide upon the fate of the stock for the coming months.

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ASIANPAINT’s average correlation of 0.35 with the Niftybees is positive but not strong. At this level the movements of the stock will not be able to replicate the same magnitude as Niftybees. [stockquote]NIFTYBEES[/stockquote]

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ASIANPAINT has a historical volatility in the range of 0.2 to 0.7. The scrip’s volatility is currently in the middle of this range.

Looking at these technicals, it appears that the stock is presently in the consolidation territory. A short-term hold is suggested. For the long-term outlook of the scrip, a breakout of the flag in either direction would be a very strong signal.

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Analysis: TCS

Today’s pick is [stockquote]TCS[/stockquote]. The stock has made a 29% since the 1020 levels of October 2011.

The up-trend since last year saw a tip-off near 1440 levels recently; this can act as a near-term resistance level for the stock. Although the stock has seen two major corrections in the last year, it is still trading above the near-term support of 1290 (long-term resistance) levels and above the long-term support of 1070 levels.

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Oscillators RSI and CMO are at currently at 52 and -6. At this mid-level RSI, the stock has still got around 20 points to reach oversold levels. The current CMO level is also not suggesting any imminent move.

The MACD line just penetrated the signal line from below and the histogram levels are on a rise as well. Both these signal are giving a slight signal of a short-term up-trend for the stock.

The GMMA chart currently is not saying anything. Both the long and short-term set of lines are running very close to each other. A departure from the current scenario, either up or down will decide upon the future of the stock.

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TCS’s average correlation of 0.50 with the Niftybees is positive but not very strong. At this level the movements of the stock will not be able to replicate the same magnitude as Niftybees. [stockquote]NIFTYBEES[/stockquote]

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TCS has a historical volatility in the range of 0.2 to 0.7. The current high volatility is a result of the EMKAY trades and it should not be a cause of concern.

Looking at these technicals, it appears that the stock is presently trendless. A short-term hold is suggested. The long-term outlook of the scrip will be decided by how long-term lines of GMMA unravel themselves in the coming days.

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Momentum and fades

There are two kinds of moves in the market: defined and undefined. The defined moves have a reason attached to them. It can be a news about the company, a new product launch, a good earning postings or a good news for the industry itself. The undefined moves are… well.. they are just undefined.These undefined moves happen usually because of their momentum. A series of up-days keep pushing the stock up everyday.

The stock rises until it has the momentum going on its side, and once it stops, this is how it falls.

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The trend can be your friend… until the momentum ends.

When you go chasing momentum, don’t forget your faithful friend: the trailing stop loss. Unlike the usual stop-loss that you might set while placing your trades, these stop losses are calculated using highs and lows of a defined period and keep your losses at a minimum based on the recent highs.These are best suited for momentum scrips since they are not set to a particular price, unlike the normal stop losses, and automatically locks-in a profit once the momentum fades.

So, next time you want to trade with a momentum stock, be sure to have a trailing stop loss in place. This will be useful not only in minimizing your losses, but also in securing the profits that you have made over the holding period if used properly.

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