Monday, October 5, 2009

A minor dip in a strongly trending market

Manish.T says "Idea cellular has been underperforming the market in the recent past, in fact if I am not wrong it had a breakdown today. Still you recommended to buy it on dips. Why?"



My Notes: Fair question. I am giving below the weekly chart for Idea with notes.




The trend remains up. Prices remain above a previous pivot low. A momentum indicator (smoothed CCI) suggests that momentum has moved into an extreme zone (-100). When momentum suggests an oversold position in an uptrend, we have a low risk buying opportunity. The stock is currently underperforming the Nifty, but we have this pattern of sectors underperforming while they consolidate, then suddenly moving up.

The Nifty continues to show remarkable resilence. Inspite of two days of declines in the USA, we did not break the 5000 psychological support. My own zone of support is about 4950. A close below this point will suggest that the short term trend has turned down.

ITC has moved up from a minor rounding bottom / inverted head and shoulder (depending on how you look at the patterns), and suggests a target of 253 (223 was the low while 238 is the breakout point approx). We will find out in the next few days.


6 comments:

suseem said...

hello ji,
this is regarding wat an idea sirji!!
looking at the daily charts,idea had made a low ofapprox 73 on aug 10,which then moved up to 75 on 15 aug.hence the stop should have been 72-73.it had also given a weakening signal around the 76-77 levels.
this is what my analysis is.
i would have cleared my positions around 76-77 range but a close below 73 is a breakdown for me with a stop of 74.
is it possible for 2 people to have contrasting views and still make money?pl comment on my views as i am new to t.a.
here are 3 different views
1)ur view of going long
2)going short below 77
3)breakdown below 73
which one to take and with wat time frame?
hoping to get a reply from u sir
take care

gourav said...

Hi Sudharsanji,

Which is better Intra day trading or swing trading..

Tushar said...

I am also a bit suprised at idea buy call.
Sure it can go to 75-76 levels but it is a short oppurtunity there rather then a buy oppurtunity here.

I will be really suprised if this stock goes any furthur up then 75-76 level.

Looking at charts, yes it has not broken the pivot low till now, but it has not broken the pivot high also after making that pivot low.
This implies weakness.
So probability of breaking that pivot low increases.
Also analysis based on single indicator is not useful i guess.

Shazia said...

Sir,
What about the telecom sector as a whole?
Thanks
Shazia

Jagdish said...

Why buy weakness. Even on the weekly charts, there is a clear lower top lower bottom. As for oversold, we saw the smoothed CCI go to 180 (we are now at 100). Sorry sir, I do not agree with you. If you buy weakness, you also become weak.

amitkbaid1008 said...

Sir,

As shown is your chart attached IDEA made a Swing Low of 63.30 on week ended 17-07-2009 and yet made another swing low of 72.25 on week ended 14-08-2009 which was the SL as per my analysis for longs which were initiated after breaking Swing High of 82.80 on week ended 28-08-2009.

If it closed below 72.25 or say 72 then it will be bearish.

I can not understand on what basis you are saying that IDEA is buying on dips. In my view such dips are not entry points for longs.