CITY UNION BANK (CMP:50.50)

RECOMMENDATION - BUY AT CMP

TARGET- 57 , STOP-47.50, TIME -T+14 DAYS (APPROX)

RATIONALE -

The stock peaked around 50 in August after the stupendous upmove. Ever since then, the stock was languishing in a 10-15% range. Today's move however is unlike the others that have taken place in the last couple of months.

With the rally above 50, a breakout of a 'rectangle' pattern on the daily charts in confirmed. Distinct pick up in turnover lends credence to this breakout. The fact that the consolidation prior to the breakout occured just above the erstwhile high of 43 established in 2008 makes the stock even more interesting.

The bullish recommendation comes under the threat if the stock slips back into the trading range. Hence, a stop of 47.50 is advisable on this long trade.

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

TATA ELXSI (CMP:292)

RECOMMENDATION - BUY AT CMP

TARGET- 335 , STOP-273, TIME -T+14 DAYS (APPROX)

RATIONALE -

The stock had been in a sideways trading range for many months. It finally bottomed out around the 230 and rallied. 

This rally has shown 4 distinct waves so far. Third wave topped out around 295 and the stock tumbled to 245. The prognosis of the third wave came under severe scrutiny on Monday's trading session because of the marginal overlap between the first and third wave.

An 'head & shoulder' pattern evolved on the hourly charts with neckline at 273. This neckline was decisively breached on a closing basis. But the stock managed to stage a strong bounce back almost immediately confirming the failure of the pattern. Failure of such potent reversal patterns lead to sharp rally on the upside since all weak hands are out of the system due to the technical jolt. Bad results would have caused even greater panic. 

The confluence of the above factors makes a very interesting trade set up. The risk is clearly defined at 273 (the break down level of the perceived head & shoulder pattern). Based on the failure of the pattern an immediate target of 335 can be easily ascribed.

Previous recommendations on the stock - click here

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

PETRONET (CMP:122.50) - TRADING BUY CALL

RECOMMENDATION - BUY AT CMP

TARGET- 134 , STOP: 117.50, TIME-T+4 DAYS (APPROX)

Note that this is a trading recommendation purely based on momentum set up.

Rationale :

The stock touched a high of 118 odd in August and thereafter kept consolidating within kissing distance of the all time high around 122. It notched up approximately 8% gains in yesterday' session showing distinct tendency to come out of its one month long slumber. The stock has come under some normal profit booking after the sharp rally yesterday - pullback after the breakout.

The stock is likely to show momentum once this brief pullback ends. The risk reward ratio too is the favor of the long trade since the pivot on the hourly chart is placed just below 118. Traders may buy the stock for for a target of 134 keeping a stop below 117.50.

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

COSMO FILMS (CMP:168)- POISED FOR TAKE OFF

RECOMMENDATION - BUY AT CMP

Investors and traders alike may buy the stock for short to medium term given the valuation cushion and sheer momentum.

SHORT TERM TARGET  -196 (2 WEEKS)

MEDIUM TERM TARGET -224 (2 MONTHS)

STOP LOSS : 149 

Company Backdrop : 

Cosmo Films was started in 1981 to manufacture Bi-axially Oriented Polypropylene Films (BOPP) for the first time in India.

The company is engaged in the production of Wet Laminating, Printing and Pouching, Label Films, Soap Wrap Films, Over Wrap Films, Tape & Textile and Thermal Laminating Film for Graphic Finishing.

Since inception Cosmo has maintained market leadership in both the domestic and export market. This is reflected through its association with leading FMCG Brands worldwide for providing them with cost-effective innovative packaging solutions.

RATIONALE : 

Tyre stocks and auto component stocks are bought as proxies to growth in auto stocks. If we take the same logic forward - It may not be wrong in buying the stock of a company that benefits from the robust performance of the FMCG companies. COSMO FILMS provides packaging solutions to many of the well known FMCG majors and hence makes a case for a good investment idea.

 The stock currently trades at reasonable valuations - TTM PE OF 7.40 and Price/Book of 1.05.

 

The stock completed wave 1 of wave 3 and 164 a few weeks back. Since then a minor correction took it to 140 odd constituting wave 3. Today the stock has gone above the high registered in wave 1 decisively - clear indication that wave 3 has begun. This incidentally has also resulted in a breakout to ALL TIME HIGHS. The stock has taken about 5 years to cross this level. This makes us feel that the move is likely to be very strong.

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Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

APOLLO TYRE (CMP:85) - BUY CALL REITERATED

We had come out with a REPORT ON APOLLO TYRE initiating a buy call at 81 for target of 98 in September. However, the performance of the stock has been lackluster.

The recent price activity however suggests that this period of underperformance is like to end. Hence, WE REITERATE INITIATING LONGS ON THE STOCK.

Target -98 , Revised Stop-79, Time Horizon - t+14 days

Rationale -
 The upper reaches of the triangle shown in the diagram above have been crossed today - Breakout of a triangle pattern !
 This pattern has evolved in the wave 2 of wave 3 (though triangles are common in 4th waves). The fact that wave 2 unfolded itself in the form of a triangle rather than the more common zig zag is the testimony of  the underlying demand for the stock.
A target of 98 (very conservative) seems to be in the offering based on the sheer equality of waves.

READ PREVIOUS REPORT

 Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

JINDAL DRILLING (CMP:608)

RECOMMENDATION - BUY AT CMP

TARGET-665, TIME-T+4 DAYS, STOP-572

Add caption

Rationale- 

The stock has been consolidating ever since it broke out a long term downward sloping trendline in early september. In the process it corrected 38.20% approximately. The volumes spiked up today accompanying a handsome price rise. This signals the strong possibility of resumption of the uptrend.

Today's upmove marks the beginning of wave 3 of 3 (provided that the level of 572 is not violated). Since wave 1 was relatively weak, a very sharp rise may be possible in the current wave.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

UPDATE ON CEAT (CMP:168)

TRADE WITH WAVES recommended a 'BUY' on CEAT on 24th of Sept. READ THE REPORT.

Since then the stock has traded in a sluggish fashion with a negative bias. This made me feel that the patrons need to be updated (Thanks to Ankur who brought the importance of updates to my notice via his comments!) on what my views are about it right now.

Although the stock has drifted down to 168 (loss of 5% from the recommended price), I continue with my bullish stance on the stock. 

Rationale -
The stock is currently in wave 2 of 3, correctly mentioned in my previous post. I had expected this wave 2 to end with a mere 23 percent retracement. This has not happened. Wave 2 is persisting for longer than what I had envisaged. However, the prognosis continues to be the same. Wave 3 of 3 is around the corner - it may not be surprising to see a 40% return from the cmp in this wave.

Oversold signals are imminent on daily oscillators hinting at the possibility of a bottom very soon.

The trend continue to be intact and hence this decline needs to be treated as an aberration and construed as a buying opportunity (if you have not bought till now).


Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

REL MEDIA (CMP:291)

Recommendation - Buy at cmp

Target -324 , Time-t+4 days, Stop-273

Kindly note that observing strict stops on such momentum buys is essential.

Rationale -
The stock has recently broken out of a long term downward sloping trendline. Notice the spike in turnover accompanying this breakout.

On the hourly charts oversold signals are imminent. Moreover, the hourlies suggest that this recent correction from 300 to 270 post the breakout has taken the form of wave 4 - Certainly another upmove in the form of wave 5 awaits us.

Traders may buy the stock at cmp for target of 324 (based on wave relationships).

This recommendation is very similar to JINDAL POLY recommended at 1005 on the same parameters last week. Patrons of the blog very well know how this stock rocketed (currently 1160) after we spotted it - READ REPORT ON JINDAL POLY.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

AMAR REMEDIES (CMP:109) - Just Broken Out

Recommendation - Buy at cmp

Target- 128, Time-t+4 days, Stop-102

Observe a strict stop as the call is based on momentum resulting from a breakout.


RATIONALE

The stock had been consolidating in a range of 98 to 112 forming a pattern called 'Triangle'. Today's upmove to 109 with good volumes has confirmed the bullish ramifications of this pattern. This breakout has occured amidst a weak broader market lending credence to the above analysis.

Traders may buy the stock keeping a strict stop below 102 (since its only a momentum call) for a target of 128 in the coming few trading sessions.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

COLPAL (CMP:859) - Shift to Defensives

Recommendation - BUY AT CMP

Target-940, Stop-827, Time - t+4 days

Rationale -

Given yesterday's fall in the indices, skepticism about the short term bullishness has set into the minds of the market fraternity. This would mean that the trading money would like to hide into the so called defensives (of course no one wants to move to cash, given the market momentum). One such defensive stock is COLPAL which has corrected a shade below 10% in the last week or so.

Oversold signals are imminent on the hourly charts. Moreover, this fall has the form of a zig zag that has achieved its target. The downside is fairly protected in the zone of 840-850 (the erstwhile consolidation from which the stock broke out in frenzy).

The robust chart set up and rotation into defensive stocks is like to result in a short term upmove for this scrip.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

KARNATAKA BANK (CMP:184)- Finally Ready to Move

Recommendation - Buy at cmp

Target - 208, Stop-176, Time-t+9 days.

The stock is equally good for traders and investors (with time horizon of 3 months or more) and hence one can afford to be fairly aggressive in this recommendation.

Rationale :

The stock had broken out of a parallelogram on the daily charts and has been consolidating since then. MACD histogram which measures momentum has registered a two month high - the same has not been exhibited by the underlying price though. This indicates an impending spell of buoyancy in stock prices in the coming few days.

The stock seems to be heading in wave 3 of 3 as per the labelling in the diagram below. Given the unambiguity about strength of wave 3, it makes sense to initiate longs at the cmp aggressively.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

JINDAL POLY (CMP:1005)

RECOMMENDATION - BUY AT CMP

Note that this is a pure trading bet and strict adherence to stops is imperative for safety of capital.

TARGET -1180 , STOP-955, TIME-T+9 DAYS

RATIONALE :

The primary reason for this recommendation is sheer momentum. Strength in the RSC and a fresh breakout on this indicator hints at the possibility of a fresh upswing in the stock price.

A flat correction in the form of a 'abc' with a 'c' wave failure has been exhibited on the hourly charts. The retracement during this correction was very shallow hinting at the underlying strength of the scrip.

Traders may buy the scrip keeping a stop below 955 (a one percent filter below the perceived C wave). The likely target based on the width of the pattern and the erstwhile wave form can be pegged at 1180 in the coming 10 days.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

TATA ELXSI (CMP:268)- Safe Play

RECOMMENDATION - BUY AT CMP

TARGET-345, TIME-3 MONTHS, STOP-245


Rationale:
Traditional Technicals - A breakout from a 'wedge' has been witnessed. The prolonged sideways move ranging about 9 months, is likely to give an additional fillip to the stock going forward.

Elliott Wave Positioning - The stock seems to have completed its wave 2 around 245 recently. This makes the stock a very good buy, considering the dynamism associated with third waves.

Oscillators - Weekly oscillators are oversold hinting at the possibility of a rally in the coming weeks.

Target - A very conservative target may be 345 in the short term. However much higher levels await for patient investors.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.

ASHOK LEYLAND (CMP:74) - Upmove Likely in Short Term

RECOMMENDATION - Buy at cmp of 74
Kindly note that it is a trading recommendation for the short term and strict adherence to stops is imperative.

Target -86, Stop-70.50, Time-T+14 DAYS


Rationale -

Performance Backdrop : The stock has been performing in line with the other auto stocks. A tapering off in momentum was witnessed in the last one month despite the robust run up in the broader market and the sector as a whole. This patch of underperformance did not create any lower tops and bottoms, thereby not contributing to any weakness.

Trendline - The recent drift in the stock prices have brought it very close to the trendline shown in the diagram above. This line is likely to act as a support for the stock.

Indicator - The Stochastic indicator is portraying an oversold reading - Oversold readings in established uptrends are good entry points judging from any yardstick.


The factors mentioned above in conjunction with other detailed technical studies prompt a buying opportunity in the stock for the short term for a target of 86. A stop of 70.50 (one percent filter below the trendline) may be observed to manage the downside risks.

Disclaimer : The recommendations mentioned herein are for educational purpose only. One should not take buy/sell decisions based on the above analysis which is prone to errors. The author does not undertake any liability whatsoever arising out of profits/losses accruing from using the above analysis.