Do you believe that you missed the spectacular market rally that’s presently underway?
It may still not be too late to jump in, selectively.
Rising stock markets don’t always mean you’ve lost the opportunity to make money.
If the underlying trend is strong then you can enjoy the party despite joining late.
Well, under all market conditions you can get good buying opportunities provided you know how to pick stocks.
In the past we discussed with you various technical indicators that generate dependable signals.
Read more about them here
MACD generates entry and exit signals for stock traders
Identify overbought and oversold stocks with Stochastic Oscillators
Identify overbought and oversold stocks with RSI
Please note: If you are following the technical chart patterns, you must rely on the price movements; it doesn’t help to blend them with your conviction.
We thought of taking the investor education initiative to the next level by sharing some interesting charts that look bullish on RSI, Stochastic and MACD indicators. And we are happy to tell you that we aim to release more such articles, as and when we spot interesting trends.
ACC Limited had a good run in March 2019. The stock made 16% gains. At Rs 1,666 the stock closed the month above its 10-month average of Rs 1,494 and also above Rs 1,548, which has been its 30-month moving average.
The stock has seen a good buying interest with monthly volume for the last two months, staying above the 10-month average volume.
The stochastic indicator appears positive since the %K line (represented by the green line) has crossed over %D line. (To understand the interpretation of this, please refer to our article on stochastic linked above.)
RSI indicator too looks positive. The RSI line (in green) is well above 9-month average demonstrated by the red line. (To understand the interpretation of this, please refer to our article on RSI linked above.)
If you recollect, RSI and stochastics are leading indicators. But they are fast indicators as well; this means they can quickly reverse too. On the other hand, MACD generates positive signals with a lag, as compared to RSI and stochastic, but that’s a very powerful signal, especially under trending market conditions.
Although in the case of ACC, the MACD line is yet to cross over the 10-month average line, it’s very close to crossing over the zero line—hinting at the possible end of a sideways movement. (To understand the interpretation of this, please refer to our article on MACD linked above.)
ACC limited looks interesting since all these technical indicators are painting a positive picture.
If the stock closes below its 10-month average or RSI and stochastic trends become bearish.
Here’re some other interesting stocks…
Stocks to be tracked more closely…
For the stocks detailed below, the technical indicators are not convincing yet, but they are worth keeping on the radar, for possible breakouts.
Karnataka Bank has taken out the 30-month average on a monthly closing basis. Similarly, it has witnessed good buying interest in March.
But on the flip side, the closing price in March isn’t convincingly higher than the 30-month average. Moreover, MACD hasn’t crossed over the 10-month average line. This makes the overall trade setup less convincing, for now. But it’s definitely a stock to be tracked closely over the coming months.
LIC Housing Finance hasn’t taken out the 30-month average and volumes have been mediocre too. But RSI, Stochastic and MACD have started turning positive. If the stock price catches up (to prove these indicators right), the stock might become a good technical pick.
Undoubtedly, Praj Industries is one of the most exciting stocks for traders and investors. It’s coming out of a 10-year consolidation. On three occasions, the stock tried to break out. But only recently it witnessed a monthly close above Rs 131— its inverse H&S (Head and Shoulder) pattern breakout price. And for the past couple of months, the stock has stayed above Rs 131. As long as this holds, there’s always a chance of a big upmove.
If you closely observe the trade setup, there’s definitely a sign of exhaustion on stochastics but on the positive side, the MACD has generated a very strong signal. RSI appears positive as well.
Let’s not forget, the stock has witnessed a huge accumulation on the highest ever volumes only a couple of months ago. Hence, some cooling off and profit taking is expected and warranted at this juncture.
Inverse H&S (which confirms the end of a downturn) and accumulation on extraordinary volumes makes it a compelling stock to be placed on your radar. As long as Praj Industries holds the 30-month average, which is Rs 92, the stock will try to take out its 2007-high. On the contrary, a monthly close below that will end the bull market for Praj Industries.
10-year breakouts don’t happen unless there’s some significant change or an expected change in the fundamentals. If stocks move decisively in one direction after years of consolidation, they usually get re-rated.
Looks like it.
Note: The intent of this blog isn’t to give you trading ideas but to help you understand how technical analysis can help you spot some winning stocks. Before you act based on information featured herein, please consider your investment objectives and risk appetite. Discipline is the most important prerequisite of a winning trade.
Disclaimer:
We, Ventura Securities Ltd, (SEBI Registration Number INH000001634) its Analysts & Associates with regard to blog article hereby solemnly declare & disclose that:
We do not have any financial interest of any nature in the company.
We do not individually or collectively hold 1% or more of the securities of the company.
We do not have any other material conflict of interest in the company.
We do not act as a market maker in securities of the company.
We do not have any directorships or other material relationships with the company.
We do not have any personal interests in the securities of the company.
We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships.
We are not responsible for the risk associated with the investment/disinvestment decision made on the basis of this blog article.
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