Thursday, January 14, 2010

Metals: Still a Time To Shine

The Wave View: I am labelling the wave structure under ABC scenario for now, since the move is more sideways rather than impulsive.
I consider TATASTEEL to be in wave Y of Double Combination, having its internals as ZigZag, with A completing 5 waves at Oct 2009 at e:585, and now moving in wave C.

Under one of my count, I consider to be making an Extended wave C / 3 where, where are completing wave (iv) on 13 jan 2010, thus moving t wave (v) which can reach to Rs. 700. That would complete wave c / 3 and then one small blip to Rs. 660 levels to complete wave d / 4 and move higher to Rs. 730 to 750. Now, I am giving very broad levels, since, market tends to do its own rather than mine :)

However, considering this is not an Extended Wave for wave c / 3 then we are ready to move last leg been wave e. This is also plausible, since considering that fact that Wave A in wave Y did not have such extention. In that case we could then have a high in the range of Rs. 700 to 720.


Intraday Bouce: Inverted Head and Shoulde - Time Frame 30 minutes

I was rather bearish on SAIL based on my post SAIL: Cup and Handle however, this pattern has been voilated, and there is an Inverted Head & Shoulder. Based on inverse Head and Shoulder the target of stock works out to 250. The current price is Rs. 242 and neckline is Rs. 240. For any one initiation long position, the stop loss can be Rs. 237. The risk:reward ratio is not that favourable, however, i woul not rule out, the stock going more than Rs. 250 with max of Rs. 255 is possible. The range of Rs. 244-246 seems a good resistance for stock.

Chart attached with levels:

The wave structure, still suggest good upside, with support still held on trendline 1, which connects all major wave point lows and can target trendline 2 which is connecting major wave top. As long as trendline 1 is held on closing basis, i would expect the stock to reach trendline 2 on upside with targets of Rs. 1000 from current price of Rs. 826. The stop loss would be difficult to tell, one could have it as breach of Trendline 1 on closing basis. Rs. 800 seems to be a good support for long. I would prefer cash long on stocks rather than derivatives. The following is wave chart attached for STER

Based on above wave count, it seems we are in last leg up. We are in a double combination structure for now, based on which as on long as trendline 1 is held, we can even move to Triple Combination. However, for now, upside seems capped only to Double Combination with high possible to Rs. 900-950-1000.

The weekly charts of Ster (similar to many stock charts) show, rising wedge, with declining volumes and negative divergence.


Sesagoa: Refer Chart, CMP 404, as long as trendline 2 is held, target works to 430(resistance line) - 450 - 480 (trend line 1).

 If these metals stocks are for upswing, then midcap metals would do rather better i guess. Adhunik Metaliks (CMP 120 made an inverted hammer at resistance of Rs. 120, and on upside can suggest a Rectangle sort breakout which can take the stock to Rs. 160. Attached charts with possible target zones.

 Bottom Line: Most of metal stocks have bounced off their rising trendline yesterday. That is rather a bullish case. As long as this trendline is held, the target shall be higher for the metal stocks, and i think we still have some shine left. If one is to look at Nifty EOD chart, there is rather alarming Cup and Handle Structure, which itsef can make Nifty reach 5400+ zone. However, i would not be rather adamant on target. Have a trailing stop loss, and trade.

The above studies are based on Technical Analysis, these are not trading ideas. One should take own decision, always use stoploss

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