Sunday, September 19, 2010

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  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.

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:-

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 : 

Stock Futures Trading Made Ezy - Relinfra

I missed the move of Reliance Infra from its low of 988 on 27th Aug. Confirmation to bullish reversal were evident in charts on 30th and 31st Aug. But yet I missed it. And the culprits for this miss were the positions in Reliance and J P Associate, where I was busy doing damage control. If you have missed my thoughts on trades in Reliance and J P Associate, here are the links again:

By the time I could disengage my mind from Reliance and J P Associate, Reliance Infra had already closed at 1040 on 3rd Sep. Next trading session on 6th Sep, I gave a call to my subscribers at to buy Relinfra Sep Futures between 1035/1040 for a target of 1070/1075. With the prevailing uncertainty in the market it was a buy call slightly on the higher side for Relinfra. But I still went ahead because of the following reasons:-
  1. On 3rd Sep Relinfra had convincingly closed above 10 day EMA. 
  2. Its 20 DMA line was at 1050 price level. 
  3. Its 30 day EMA was at 1065 price level.
  4. The upper band of Bollinger was forming at price level of 1080.
  5. Even its 200 DMA was converging on price level of 1080 to give resistance.
So it was expected that the scrip will finally try to test its major resistance at 1080. But the smaller resistances at each level was worrying me along with the fact that we had entered the scrip at a slightly higher level. Uncertain market conditions were also not helping me firm up my mind. Therefore to be on safer side I gave out instructions to trade with trailing stop loss. Trading room details are in this link:  From this link I am reproducing below the relevant comment thread which gives out my safety instructions keeping in mind all resistance levels:-

As it crosses 1055, put trailing stop loss at 1050. After it crosses 1060, put S/L at 1055 and wait 4 tgt of 1070/1075
Finally trailing stop loss was met at the very first resistance level. So my subscribers had to exit this trade with  intra-day profit of about Rs 3000/-. Academically speaking,  the scrip made a high of 1087 on 14th Sep, but my subscribers had exited intra-day on 6th Sep itself with some profit from a trade which was intrinsically a risky trade. And the reason for being risky was that I could not catch this trade at its low, to provide for the conviction I neded to hold for long.

Saturday, September 18, 2010

Stock Futures Trading Made Ezy - Punj Lloyd

What can be said of Punj Lloyd! A company with such strong order book and global presence has been trading at 52 week low on 1st Sep. And on 2nd Sep I gave a call to buy Punj Lloyd Sep Futures to my subscribers at . Another call which could be termed as contrarian to market sentiments. Then why did I give such a call? Find the reasons below:-

  1. Bollinger Band contraction had been significant with price of 1st Sep touching the lower band of this narrowed Bollinger. The upper band was getting formed at price level of 120.
  2. Trigger line had started crossover of MACD line from below zero.
  3. In Ultimate Oscillator there was bullish crossover of line of 30 from below.
  4. In ADX there was evidence of jump in buying line with decrease in volatility.
  5. And finally my own customized Slow Stochastic was again screaming oversold to maximum level.
From the above signals I was convinced that whatever the TV channels might be saying, there was merit in buying Punj Lloyd at that point. I was sure that the scrip would  move up to 120, albeit at a slow pace since the volatility index was dropping sharply. However those who entered the scrip could book intra-day profit of Rs 3500/-. One of my subscribers who had carried the position overnight could make a profit of Rs 7000/- next day. That's how easy it is!! From purely academic standpoint, Punj Lloyd made a day high of 119.6 in the last trading session.

Trading Room activities are contained in this link: 

Stock Futures Trading Made Ezy - EKC

EKC has been a case of how fundamentals of a company and its performance has no bearing while making money through trading stock futures. When I gave my recommendation to buy EKC Sep Futures on 2nd Sep at  some of my subscribers were taken by surprise, resulting in indignation. Their indignation was justified since here was a buy recommendation of a company which was trading at its 52 week low while the index was making new highs. Anyone can put two and two together and arrive at the conclusion that fundamentally speaking this was a wrong call. The trading room details are in this link here: . Such justified indignation was aired in the trading room which I m reproducing below:-

can you explain why you have recommended ekc ? is it for the reason that it is trading around its 52 week lows ?
But as I mentioned earlier, fundamentals of a sector or a company has no place in trading stock futures. It is all about timing your entry. Following are the reasons why I had recommended a buy of EKC Sep Futures, despite highly negative market sentiments for the company:-
  1. From 27th Aug to 1st Sep, EKC was continuously getting support at 107 price level.
  2. This accumulation by smart money was happening at lower band of Bollinger with the upper band suggesting a target of 120.
  3. Strong resistance zone was also evident at price level of 121/122, suggesting that this accumulation at 107 price level will try to test that resistance zone.
  4. My own customized Slow Stochastic was screaming out maximum tolerance of being oversold.
Hence armed with this knowledge I gave this buy call of EKC Sep Futures. Those who bought the scrip exited with intra-day profit ranging from Rs 6300/- to Rs 7500/- in 2 hours flat. As easy as that!! And finally in last trading session this scrip made a high of 123.2 , but that is just a point of academic interest. 

Stock Futures Trading Made Ezy - Rpower

Since May 2009 Rpower has been moving sideways between the price range of 140 to 200. That is a very long time for sideways movement. It only indicates that any move outside this range will be ferocious in intensity. In my opinion the move out of this sideways range will be on the upside. This I have inferred from Elliot Wave calculations. Hence if you are a long term investor then Rpower is one space where you should invest at current level of 160.

For trading in stock futures the long term story of a scrip does not help. The daily requirement of mark-to-market (mtm) deters one from holding a position for long term. Trading by retail investors in stock futures can be meaningful at best for short term. Hence the moment I saw near term prospects of making profit in Rpower I gave my recommendations for buying it. On 16 Aug 2010, my subscribers at  bought Rpower Aug Futures as per my recommendations between 154/156.

I had recommended buy of  Rpower for the following reasons :-

  1. Support of 200 day moving average was available at 154.
  2. My customized slow stochastic was at its maximum oversold position.
  3. There had been no technical bounce worth its name from price level of 190. Hence from support of 200 DMA it was logical to expect at least a bounce of 23.6%. That would mean a price level of 163 if the scrip had made a bottom at 154.
However the scrip made bottom at 150.5 with a flourish. It formed the Hammer at 150.5 on 18th Aug which I explained to my subscribers during the course of trading and this can be seen at this link here: From this link I am reproducing the relevant comment thread below:-

@Neelima. I know it is testing ur patience. For the time being just relax. Process of bottom formation at times can b testing to the nerves. Rpower has hammered its short term bottom price at 150.5. Before exploding upwards it is trying to shake away the weak hands. That is one of the ways for market makers to make money. After all futures trading is a zero sum game. If multitude of retail investors and other fishes do not lose money, then how will handful of big fishes gain handsomely??
With hammer at 150.5 in place, the minimum bounce of 23.6% meant a price target of 160. This hammer price was not violated on 26th Aug which gave me the strength to recommend to my subscribers to buy 2 lots of  Rpower 160 Call at average price of Rs 2/- on 30th and 31st Aug.. And as expected Rpower sailed to 161.8 on 6th Sep. Since Rpower 160 Calls were out-of-money call options, one lot of size 2000 shares was available for total capital investment of only Rs 4000/- . But the price increase in these calls was fast and furious once the stock price neared 160. Those who entered these positions realized how easy it is to profit from futures and options at correct entry point.