Saturday, October 3, 2009

Trading View: JP Hydro & Nifty


Thanks to an eye-opening Comment by a reader in my previous posting related to IDFC, that I realize that posting free calls on a blog is a thankless job. I wonder, as commented by that particular reader, as to whether Technical Analysis is just as good as you want the data to be interpreted. I kept wondering- aren't charts a reflection of the demand-supply scenario in the market? Well, I am not here to discuss about all this as of now. But, one must remember, trading is like a coin. It has two sides- Stop loss and Targets. It is impossible that all trading calls will click.

But, I have come to a conclusion that I will not post calls on this blog. But I shall keep posting my views on the stock or index. I shall present chart view from my side & leave the decision of trading call on the readers themselves who track this blog. The crucial entry, exit, stop loss and trailing stop loss points will have to be determined by the readers themselves. I would be more involved in providing stock ideas and material which could be more of educational in nature & not recommendation to Buy or Sell whatsoever.


Traders are free to trade whenever they feel fit and take their own due-diligent decision to trade depending upon their intellectual to judge the viability of my views.
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Trading View on Jaiprakash Hydro-Power

In the prevailing positive momentum for the markets, have markets given a miss to one of their trading favourite among the momentum stocks i.e., JP Hydro ??


Pennant is a short-term continuation pattern which is characterized by (triangular) consolidation & resumption of the move in the previous trending direction. This pattern also features a sharp decline in volume during the consolidation phase. There are signs that this particular pattern could be emerging on the counter of JP Hydro.

Charts Courtesy: www.icharts.in



Investopedia.com defines Pennant as, "A continuation pattern in technical analysis formed when there is a large movement in a stock, the flagpole, followed by a consolidation period with converging trend lines, the pennant, followed by a breakout movement in the same direction as the initial large movement, the second half of the flagpole."


Without going much into detail regarding the working of the Pennant pattern, as can be seen on the above chart of JP Hydro- the stock has witnessed an up move during the month of July from Rs.65 to Rs.85. However, since then the stock has gone into a long consolidation for the following 2-3 months hinting towards formation of a Pennant pattern.

The consolidation zone typically reflects features of range bound movement with in the converging trend lines backed by declining volumes. The breakout from this long consolidating pattern could herald a rally up to Rs.100-110 in short duration of time. Note: Traders should be cautious if the stock breaks substantially downward below Rs.78 mark.

Traders can use various trading techniques which best suits their risk appetite or judgement profile. One option is to trade once the stock breaks past the upper trend line of the triangle for further confirmation of the emergence of the Pennant pattern in the counter. Second option could be to build long positions around current price with Stop loss at the lower trend line defining downside support.
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Nifty View



In Nifty, as we can see from the above chart that the market is steadily moving up but in a narrow range. I have highlighted two trend lines (blue lines) which is acting as support and resistance for the market on either sides. My view is that if markets were to break past the upper trend line, than we could witness a steeper rally up to Nifty 5250-5450 levels in times to come over shorter duration.

However, currently Nifty is resting very near to the upper trend line of the range which could be a reason to be cautious until we get a thorough breakout from the range. There is a downside support around Nifty 4930-4950 zone. So, vaguely, we can consider nifty with in narrow range of 4930-5125. A bigger market move needs a break past this range with a weekly closing.


Disclaimer: All data, content and/or reports posted by Viral Rajnikant Dholakia on this site are only for information and educational purpose of visitor/readers of this blog. It does not constitute to be a recommendation/offer/advice to buy or sell assets/securities in any form. Individuals/organizations are requested to take an informed call by consulting their Financial Advisor before acting on any matter/data published on this blog. This blog does not warrant of any kind of accuracy, adequacy and completeness of data, ideas or thoughts published in it. This site and Viral Rajnikant Dholakia assumes no responsibility or liability or loss or damage of any kind/nature for your trading and investment decisions and its consequent results.

10 comments:

DARK KNIGHT ABHAY said...

nyc post..!

plz keep continuing giving ur calls..
there were hardly any of ur calls which didn't reach dere targets...!
don't get disappionted by these kind of comments ,every gr8 person had 2 face criticism...!

abhay

jamesvaikom said...

Sir,

What is your view on huge quantity of puts written in nifty. According to me if market goes down sharply many put writers will sell their holdings to cover their puts and that will cause more down side.

Thondaiman said...

Please do not take such comment seriously. Some people especially new to the market like to see only one side of it. Every call whatever be the market trend will have some inherent risk. To be risk free once should invest only in debt. But I have been monitoring your calls and most of them have hit the target. Please continue the good work as you have more number of good followers…

Anonymous said...

Hey Viral, dont get bogged down by un warranted comments. See, even blogging and free calls have two sides some will agree others will not, as long as you have more people who agree and follow then those who dont I dont see any issues in you continuing. The choice will remain with you though.

gpawansir said...

You are doing great job ,please continue it.take it easy.let it and forget it.may GOD bless you for your helping nature.keep it up.don't take these foolish comments seriously.

Shabu's said...

Dear Viral,

As I said in my comment for previous article, you have to take negative as the other side of coin.

I wish, you to continue your good work, where you are putting strict guidelines including stoplose as well as a clear disclaimer. I hope people who are making such comments reading only the Buy range and Targets figures..

People least values the hardwork behind each and every post, I know that well!

So, let them comment..

best regards and thank you for the power packed post.

Shabu

DARK KNIGHT ABHAY said...

Reliance gives bonus shares in 1:1.
1st bonus share issue after 1997's(2:1).

Thondaiman said...

Dear Viral,

I am holding Jphydro around 81. From past couple of days this stock is moving between 76 and 80. The results for this stock are slated on the 15th. I can hold this stock until end of this month. But in general power stocks are looking weak. Whats your advice to me would be? Should I continue holding or exit at market price, will this stock likely to move above 81. Appreciate your advice.

Viral Rajnikant Dholakia said...

Dear Thondaiman,

Since last 5 sessions JP Hydro has slipped below it's 50 EMA levels which is currently standing at Rs.81/-. This is a sign of weakness.

Most probably, you must have bought this stock based on this blog's view regarding emergence of a 'likely' Pennant pattern in this counter.

However, the hopes of this pattern still emerging is alive until it manages to stay below Rs.75/- albeit with a low probability than before.

I leave 2 Options for you at this time based on chart signals:

1) Exit around Rs.78-79 & Re-enter later once we get confirmation of an up move around Rs.83-85.

OR

2) Hold on with SL of Rs.75 if you can carry as much risk of holding with such deep SL.

Personally, I would exit on current sign of weakness with small losses & would like to re-enter at higher levels with confirmation of an up trend. Resistence of Rs.85 is a crucial indicator above which stock trend turns positive (This view is valid for very near term trend only).

Thondaiman said...

Thanks Viral for replying. I will hold this stock with SL of 75 with hope that result is around the corner and there may be a spike in the price.