So clash of the titans begins : bears 4184 t3 (+my favorite w3 target), 4200 round figure, 4240 old tops
Bulls support 3900 breakout 50% retrace ultimate ground to be held just like 4240 for bears.
Bulls supports 4074/4025/3987/3915
Keep in mind some bullish stocks are either giving late breaks w3/wc or early w5 after consolidation. TRADE THE BREAKS UP if you are a bull!!! The stock chart overrides the nifty chart.
No doubt some stocks are not doing w4 because they are too busy topping out and crashing after wc rallies. Go short and stay short on those. TAKE THE BREAKS DOWN if a stock is topping out!!
Given the fact that we got an extension from 3600-4000+
We now have a dip which can be classified as a w4 on nifty and strong stuff like reliance/bharti. If i had to pick one number its 3975. Came to me in a flash and its also 21 ema+0.382 area. The issue is it came on the way up :) and i already got burned trying to short it. Thats the reason why dreaming is fine but trading the actual market action is important. Anyway keep an eye on the nifty auto system , it went short at the open http://niftytraders.blogspot.com
While some resistance was anticipated near 4184-4240, the actual turn always comes as a minor surprise. The good news killed us, bharti+reliance both had good results but all the news was in the price. If you can't rally on good news then u correct 5-10%. I would still stand by 4440 since we are in a rising trend channel. W4 usually finds support at the lower end of the rising channel which reads maybe 3910 right now. My time target for corrective is maybe 3-4 more days or so. So in 3-4 days the channel could be as high as 3960. If you took may puts by mistake on my eariler call for a may crash. You might want to get out near break even. You would see break even levels in a decline to sub 4000 levels. Patil might have gotten it right this time. he is calling for a may bottom cycle.
Anyway plot your own channel make your own decisions :).
I am buying stuff in dips at my value regions @ my price. bought prithvi p.e of 6
target is p.e of 8-10, 20% gains within few months.
even if it were to remain at p.e of 5 next year stock would be up to around 350 or so , thats worst case scenario. best case is 500 or higher some time next year.
I will give u a lot of levels and reasons why those levels are important. I hope you learn a thing or two by studying which levels are important and why. The job of the bulls is to keep the market between 3900-4200, we need a higher low above 3900 to form the w4 bottom. That can help to take us to 4440. Nifty can decline for another 3 days or so. While nifty is consolidating stock specific breakouts will continue and can be taken.
The targets as always are simple: watch t1/t2/t3 and also watch retracement levels
Typical w4 retracement is roughly 33% which reads 4023, thats also a gap fill target.
favoured target zone =4025-3909
3987-3971 is an important region 0.382 + old low
We have two gap ups to fill i don't know if one will get filled or both.
S&P CNX NIFTY, Analysis Date:4/27/2007 3:53:59 PM
Close/cmp:4076
Swing : Down=Sell ( 3.000% sensitivity)
T1:4025.91 T2:3909.19
T3:3720.35 1xR:3022.45
SwingHigh:3,901.4 Stoploss:4,214.8
SwingLow:3,618.6 CMP:4,076.0
2xAtr14Stop:51.9575
Narrowsl:4,214.75
WideSl:4,584.36
Lower Chan:3856.17 Upper Chan:4242.39
ResLine:3694.61
Retracements :3618.6-4214.75
0.236:4074.06 0.382:3987.02
0.5 :3916.68 0.618:3846.33
0.764:3759.29
Cipla has given a mega gap down. It could pullback 224-240 but it should drop further. Cipla is trading at 23x trailing earnings even after gap down while other pharma trades for 20,30,40x. I guess most of the bad news has been corrected in this nasty decline. Value buyers are waiting at 180 for sure. Anything higher is an ok buy not a screaming buy.
Simple rule for value buying if growth rate = x% for next few years buy at a p.e of x or lower provided all other fundas are fine.
So for instance bharti which grows at 40-50% can be a buy at 40-50 times earnings, no issues. Right now bharti is trading at 40x last quarter's annualized earnings and maybe 50-60x trailing 4 qrtr earnings.
Not a screaming buy but just about fair value.
Tcs/wipro/infy which grow at 30-50% per year are value buys near 30x trailing earnings
tcs trailing eps = 42 , fair value :42*30=1260 mega value = 42*25 =1050:) (Notice how the emas breathe with the fair value, 13 week ema might be 1260, 13 month ema 1150 and 21 month ema 1050)
Siemens was mentioned as a value buy near 1040 , 40x trailing (growth rate 40-50%)
13 month ema 1030
w4=volatile moves
stocks which can retest old highs or go higher after a correction are the leaders
like bharti/reliance but they must do their corrections first.
Also the late laggard breakouts which are only now giving breakouts w3/wc
or the early movers which went sideways earlier and are not trying w5 are your prime candidates for upmoves. The point is since nifty is out of its 3900 trading range the same pattern will be tradeable on stocks , breakouts will work.
i.e hll early sideways corrective still unfolding will break up soon
colgate same story , aurobindo also already in sideways phase and will break up before nifty.
fresh breakouts like litl, indusindbank, lichsingfin crompgreaves managed to give some upmoves. HCC dipped today on weak results. If u are interested in the long term story then trade in delivery. The futures trade should have been booked after it gapped down intraday on first pullback to 103. If you are still holding u should get a 102 exit for sure. If you can keep an sl below 97/95 then hcc still has 109-110-116 open. Not looking very good just now.
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