Sunday, September 19, 2010

Stock Futures Trading Made Ezy - Rcom

Rcom has been been an under-performer  since May 2009. In fact the entire telecom sector has been under heavy weather but not as much as Rcom. But Rcom has great potential for long term investors. Hence one can buy at present level of 160/170 and hold for two years for a target of 350. But here we will be discussing strategy for buying for very short term, since we are interested in stock futures trading.

On 7th Sep I recommended buying Rcom Sep Futures at 162/164 to my subscribers at http://www.stockezy.com/ . On 6th Sep the scrip had closed at 163.3 and was near its recent low. The decision on the face of it was fraught with danger. Every TV channel and print media was dead against buying Rcom before 135/140. So if these experts were right then holding a position at 162/164 would mean giving MTM of Rs 60000/- in case Rcom does fall to 135/140. So naturally Trading Room sentiments were one of fear and trepidation which can be felt through this link : http://www.stockezy.com/opinions/7342/buy-rcom-sept-futures/ . Subscribers were concerned and shared their concern in trading room. Sample these reproduced comment threads from above given trading room link:-

Posted by Vivek Agrawal - Tue, Sep 07, 2010 1:11PM IST
“
This just came in - BNP Paribas cuts target price on Reliance Comm
(Reuters) - BNP Paribas Securities said on Tuesday it had lowered its target price on India's Reliance Communications to 140 rupees from 175, while retaining its "reduce" rating.
Any thoughts?
”
Posted by ashok shah - Wed, Sep 08, 2010 9:14AM IST
“
RCOM IS 161.90. MANY BROKERAGES HAVE DOWNGRADED PRICE TARGETS.KOTAK EQUITY HAS PUT 125 AS FAIR MARKET VALUE. WHAT WE SHOULD DO
”
Posted by Archana Debnath - Sat, Sep 11, 2010 9:41AM IST
“
On Monday, if Rcom trades strongly above 167, then hold with stop loss at 165 for tgt of 172/175. Otherwise exit at 167
”


After 6 trading sessions of idling within a range of 162 to 165.5, Rcom finally gave way to lower side and closed at 159.2 on 16th Sep. When it was falling below 162 I was advising subscribers to pick up more. Why was I doing so? Didn't the voices of all experts and Fund Managers scare me? Find the reasons below:-

    1. From 28th June onwards Rcom has been continuously falling. It fell from 206.7 to a low of 155.3 on 31st Aug. In this fall there has been no significant bounce. The wave count as per Elliot Wave Theory suggested that the technical bounce would take place from 155.3.

                    1. On 1st Sep there was bullish crossover of MACD by its trigger line from below zero, and the scrip closed at 164.2 confirming a minimum technical bounce of 23.6%.

                                    1. 23.6% bounce would mean a price target of 167, which is also the resistance level of upper band of Bollinger.

                                      38.2% bounce gives a price target of 173, which is slightly higher than the resistance level of 100 DMA and 200 DMA.

                                                                                                                                1. In the last trading session the scrip made a high of 169.3 and closed at 167.2. All my subscribers have already exited with profit ranging from Rs 2000/- to Rs 6000/-. But here the potential for making huge profit was definitely there, if and only if we had shut our TV sets down.
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Stock Futures Trading Made Ezy - Sesagoa

Trade in Sesagoa has not been an inspiring trade. On 9th Sep I gave a call to my subscribers at http://www.stockezy.com/  to buy Sesagoa Sep Futures at 312/315. Day low on that day was 310.1 and from that point Sesagoa has kept itself higher only. But still my subscribers could not benefit from buying a scrip at its recent low. It was because I was not comfortable with the negative news flow of this company and its group companies. But technically speaking it was the right time to buy. Reasons for buying this scrip were as follows:-

  1. There was bullish MACD crossover by its trigger line from below zero.
  2. My customized Slow Stochastic had reached its oversold position.
  3. Bollinger bands had narrowed down considerably and the buy price was at the lower end of the band.
  4. Upper band of Bollinger was forming around 330, indicating that the scrip should test this upper band as the first resistance.
Despite all the above reasons there was a degree of discomfort in short term due to negative developments of illegal mining in Orissa and also environmental issues. So this is what I had to say after the close of trading on 9th Sep.

Posted by Archana Debnath - Sat, Sep 11, 2010 9:35AM IST
“
On Monday,if Sesagoa opens gap up above 320, then hold with stop loss at 318 for tgt of 330/335. Otherwise exit at 318/319
”
On Monday, ie 13 Sep, the scrip did open gap up but only around 315.5. That made me give the target to exit at 320, because it was the first minor resistance of 10 day EMA. Instructions during trading hours on  13th Sep are reproduced below:-

Posted by Archana Debnath - Mon, Sep 13, 2010 9:42AM IST
“
All to exit at 320/322
”
By exiting this trade my subscribers could manage to book profit of about Rs 2000/3000 only in two trading sessions. However on 13th Sep  itself, Sesagoa made a day high of 327 and closed at 325. And the very next day the scrip made a day high of 332, but we had already exited without reaping the actual benefit. This is what fear can do to you. Wish I had more conviction in my target initially given out on 11th Sep.
Trading room activities are contained in this link : http://www.stockezy.com/opinions/7367/buy-sesagoa-sept-fut/ 
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