Tata Motors: A Follow-Up

Posted by on May 16, 2012 1 comment

This is a follow-up to the earlier post http://mappingmarkets.com/2012/05/04/tata-motors-is-it-a-slowdown-or-reversal/

Price has since moved in line with expectations and has dropped closer to the first target/support of Rs.260 mentioned in the prior post.

Those who shorted based on the prior post may move stops to breakeven now. The recent price action has strengthened the bearish / cautious view. A fall below Rs.260 could be a clinching evidence of reversal of the recent uptrend.

Watch this space for updates.

 

Tata Motors: Is It A Slowdown Or Reversal?

Posted by on May 4, 2012 No comments

While I am not a big fan of predicting tops or bottoms, a look at the daily and weekly chart of Tata Motors suggests that the stock may have a hit a significant peak / resistance at Rs.321. Take a look at the daily chart featured below.

Price has run-up sharply which is always a dangerous sign. While it’s exhilarating if you are holding long positions, it is equally important to snug stops to protect profits. The cautious approach is warranted as such steep rally is invariably followed by an equally steep correction.

Have a look at the set of blue lines drawn in the chart. These lines carry frequency and have described price pretty well. Notice how price has corrected right from the upper line recently. Unless price recovers swiftly and moves past Rs.321, I would expect a correction to the first support at Rs.260.

For those who swear by indicators, there is a glaring negative divergence in the weekly chart. between price action and the RSI. While  a negative divergence by itself is not a clinching evidence of a reversal, it definitely is a forewarning.

Not for a moment am I suggesting traders to bet their farm on a short trade. There is nothing in the price to suggest that a reversal might occur. This is just a warning to shareholders that the price is at an area where it might run into trouble. So, a cautious approach would be in order.

If the support at Rs.260 breaks, the price could retreat all the way down to Rs.210. Unless we a see a quick rally in the near future, I would not be surprised to see the price drift to the final support at Rs.210.

If the price moves above the recent high of Rs.321, short position would be stopped out and am more than willing to admit that I erred in the reading of the chart.

Two-Wheeler Stocks: Time To Pare Exposures

Posted by on May 3, 2012 No comments

The technical structure in the two-wheeler majors Bajaj Auto and Hero Motocorp have deteriorated in the past few trading sessions. Let’s take a look at the outlook for these two stocks. Have a look at the daily chart of Bajaj Auto featured below.

It’s apparent that the sellers smacked the price down at Rs.1,775-1,830 range. Despite numerous attempts, the sellers were too strong and did not let the price get anywhere beyond this zone. The subsequent pattern of lower highs and lower lows is a sign that the buyers have given up and a significant downward correction is underway.

The immediate support-cum-target for the downward move is at Rs.1,370-1,400 zone. But, I would not be too surprised to see the price drift to lower levels of Rs.1,180-1,210 range. The bearish view would be invalidated on a move past Rs.1,650.

Let’s shift focus to Hero Motocorp which has cracked big time today. A cursory look at the daily chart of hero Motocorp indicates that the price pattern in this stock is no different from Bajaj. The stock has faltered on numerous occasions at the area of sellers at Rs.2,210-2,250.

The sharp fall today is a sign that the last set of buyers have given-up. A correction to the immediate support at Rs.1,950. But, I would expect a slide to the major support at Rs.1,710-1,730 range. This view would be valid as long as the stock trades below the stop loss level at Rs.2,300.

Divi’s Laboratories: Sellers Overwhelmed !! Where is it Headed?

Posted by on May 2, 2012 No comments

The stocks from the pharmaceutical sector have been attracting market interest in the recent months. A look at the weekly chart indicates that Divi’s Laboratories could join the bandwagon. Direct your attention to the weekly chart featured below.

 

The area of sellers at Rs.830-850 range has been overwhelmed and the stock could now rally to the next resistance at Rs.1,100-1,150. Have a stop loss at Rs.750 for long positions.

Let’s talk of higher targets once the price hits the initial resistance at Rs.1,100.

Siemens: Call it Geometry or Symmetry

Posted by on April 25, 2012 No comments

Have a look at the daily chart of Siemens, featured below. After a sharp run-up, price has been consolidating in a range recently.

After a breakout, price tends to come back and re-test that breakout area. This simple concept is demonstrated in the above chart. Price is now at a area where it is most likely to turn and resume the uptrend.

Long position may be considered with a stop loss at Rs.740, for a target of Rs.850.

Reliance Industries: Will The Buyers Give Up?

Posted by on April 21, 2012 No comments

This stock has been a huge underperformer for several years now. The company announced its quarterly performance yesterday and the question in everyone’s mind is where is the stock headed? Being an index heavyweight, the movement in this stock would be of interest to everyone tracking the equity markets.

Have a look at the daily chart of Reliance Industries featured below.

It is apparent that the stock has been moving within the area of buyers / sellers highlighted in the chart, for several months now. If the buyers, who were present earlier at about the Rs.720 -mark, fail to show-up or decide to pull-out, the stock could then see a sharp fall and could test next level of support at Rs.630-650 range.

During the recent rally, the buyers failed to push the stock beyond the area of sellers at Rs.850-odd level, which is a sign of weakness. In all probability, the price should reach the next target / support level at Rs.630.

Unless the price moves past Rs.772, brace for a slide to Rs.630.