Good deal for Day Traders - Removal of the Share Transaction Levy

Today is the last day of the year 2015. As per the Budget 2016 announcements, the Share Transaction Levy will not be included in the Transaction Cost from the 1st of January 2016.
 The new structure of the Cost is given below:

 

Based on this the total cost is -/82 cents for every 100.00 rupees. This means that if you buy on a day and sell  any day after the cost will be -/82 cents for every 100.00 rupees on both sides. But the most benefited will be when you buy and sell on the same day. Then you will have to pay -/82 cents only for the first side of the buy or the sell only.  Most importantly the stocks with smaller values such as under 5.00  or 10.00 will have a bigger % return, as the minimum tick size is -/10 cents. As such if you Buy a stock at 10.00, the cost will be only -/08 cents, and if you sell it at 10.10 on the same day you have a gain of -/02 cents. If you buy a stock worth 5.00 or below, then the gain will be even more attractive in rupee terms. An example of buying and selling within a day is given below:

SIRA 100,000 buy at 4.00 = 400,000.00 + 3280.00 = 403,280.00.
Sell SIRA 100,000 at 4.10 = 410,000.00
Nett Gain = 410,000.00 - 403,280.00 = 6720.00 or 1.67% a day, which works out to a monthly return of 1.67% x 30 days = 50.1%

You need to know that there is always a higher risk when you are wanting an equally higher return. Therefore you need to mange the risk well before executing a Day Trade. If you succeed in the Trade then you will know that you did the trade without physically moving out cash .

Hope you will make use of this opportunity, while it lasts!!!

ASI - 90 days since 19th August, 52 declines and 38 increases.

ASI's present down trend started on the 19th of August 2015. This painful fall has now lasted for exactly 90 market days. During this period on 52 days the market has declined, while in 38 market days it had increased. Presently the market is taking support at 6800, which is important to hold. Before this the market had failed 5 times to hold on to support levels and trended down. If the 6800 is going to be the level at which the trend change takes place, then 7000 points could be tested in the short term.

ASI was successful to have got supported @ 6800 points, thus far.....

ASI has held the support at 6800, and trending in and around the 500 sma, thus far. But given the volumes during the whole of December, we see the market is performing as per the seasonal sentiments. If that is an advanced indication of the way forward to the next month, then the Month of January would be a better month in compliance with what we usually see. But the level of participation by the Traders, are not that encouraging, which makes the market a place for bargain hunters to take positions with a medium to long term view.

 As the market is not showing any steam, they too are taking a very slow and cautious approach. Almost all the High Net Worth Individuals or Institutional Funds are not active, so too are the Foreigners. Then you have the ever volatile Global Markets, also the other issues inside the Country. All these negative factors have made the market more fragile. In this confusion, the market to hold above 6800 points, appears to be a great sigh of relief.

AEL - Made a return of 4.33% nett of costs in 6 days

The 1st post on AEL was made on the 10th, and a buy between 22.00 and 22.50 was discussed. The basis for this recommendation was  a SWING LOW Strategy. The secret of Technical Analysis is that there are many strategies to choose from, but you have to decide on the fewest to form your Trade Setup. Otherwise you get confused so much that finally your efforts will be futile. No Technical Analyst would agree with another, it can never happen. Because if all agree, then all either will only buy or sell. If all want to buy then who will sell?
 Buying below 22.50 wasn't impossible during the next few days, since recommendation before it settled over 23.00. Thereafter it went up and re-tested the resistance of 24.00. On this day any one could have sold at 23.80 and 23.90 without an issue. Selling it at 23.90 would have given a return of 4.33% nett of cost, in 6 days. As the market is fragile, and Negative sentiments are all over, taking this opportunity was rewarding. But the trend for AEL is more bullish. Therefore we will see a break out of 24.00 at some point. But 25.00 looks a strong area of resistance to be broken for a move higher.

RCL -Present position

In my earlier post on RCL I mentioned that the price could test the 50% Fibonacci level of 118.50. But it tested the 38.2% fib. value of 114.00 and retraced. Presently it is trending side ways between the 23.6% fib. value of 108.50 and the 38.2% value of 114.00. RCL was trending around 110 to 116 before the stock broke down to 100. Thereafter it took support between 102 and 106. If we see the present support of 108.50 to 114 is held successfully then the testing of 118.50 is still achievable. It is in fact has a very good possibility to settle above 120, in the medium term.

Grain Elevators - potential after cost return of 7.90% is evident

My Trade set up for GRAN.N.0000
BUY(Enter) at 90.00
SELL(Exit) at 99.00
Stop Loss at 85.00
Profit 7.90%
Loss if stopped 7.35%
A breakout of 100 can take it up to a decent trade.


GRAN.N.0000 has become one of the favorites of traders since of late. This had a phenomenal rally during 2015. Trading around 35.00 for many boring days in the early part of the year, and flying through, during the mid part of 2015, and reaching 120.00 in a matter of 2 to 3 months. But the Sellers, who are also called Bears smashed it down, and the stock came down a little more than 28% as fast as it went up, to hit a low of 86.30 on the 4th of December. From the high of 120 to the low of 86.30, the prices have come down 4 times and has gone up 3 times. The % of declines during the down times has been 13.3%, 22.2%, 7.35% and the final had been 14.6%. During the up times the % increases are 12.5% 12.09% and 7.41%. Presently it is trending at a narrow range between 86.30 and 91.80. Company has shown a turn around, ans they are making higher profits, although the  P&L of the Group shows an inconsistent profit growth on a quarter to quarter basis. They have nevertheless  reported a profit of 9.52 for the 9 months till Sep '15. In the first quarter they made 2.80, and the profits were released in May-June period, during this period the prices moved from 35.50, to 53.00. Thereafter it trended side ways till mid July. During July-August once again the 2nd Quarter results came, this time the profits were 2.59, this time the stock went upto 86.00 by the 19th August.  During Oct-Nov period the 3rd quarter results hit the market and 3.86 was what they made. From a low of 72 on the 7th of September, to a high of  120 on the 14th of October the prices rallied. As we are expecting the final quarter results to hit the market somewhere in January-Feb of 2016, if they keep upto the average quarterly profit growth of  3.17, then they can end up the year with a profit of 12.69. This expectation is something that will take the stock prices to retest the psychological levels of 100, 110, 115 and finally 120. I feel the counter can rally upto 99 and 100 in the present phase.

AEL touched 24.00 but only 2 shares were sold

Yesterday's post on the AEL, I mentioned that if you had bought since my 1st post, could take profits between 23.80 and 24.00, to get a +/- return of 6%. Today it went over 23.80 and if any one wanted to take profits would have easily sold between 28.80 and 28.90, but not at 24.00. That is because only 2 shares were sold at that. This is the reason why I said to take profits at 23.80 to 24.00. However for those who opted to hold, absolutely great. Because the stock if break out 24.00, would see it moving to 25.50 at which there can be resistance. Today's close is also significant. The reason is that the high of today is higher than yesterday's, and if Monday's high is going to be lower than today, that would be a swing high point, which may pause the present trend.  Remember it is only the present trend that started after a swing low point that took place on the 9th,10th and the 11th of this month. For those who would think long on this, can take relief in the fact that the MACD has given a buy signal on it from yesterday. Also the overall market is gearing to be in an uptrend and may extend to January as I have been mentioning on many occasions. Therefore there is hope for the ones who are holding the stock. Also if you have missed to take a position on it, then any down side will be an opportunity not to be ignored.

Price and Volume helps you more than your Ego.

This is why I say it is worth looking at Price and Volume behaviour, than what I know. Why I want to be guided by Technicals is because the price and the volume are like the Ocean. Every thing that is out there is infused/flows into the Price and Volume. No one can dictate terms to the price. Price behaviour sets the trend together with the volume.

As long as you respect the trend set you will win, if not you'll loose. There are many ways you can interpret the trend, as such it is really hard for you to say that the trend that you spotted is the right trend. This is why you must respect the reality of life, that there is nothing certain in life. Also no one is perfect. This is why a stop loss is important. IF the trend you spotted, is wrong then be honest with you and loose with dignity. This is easier said than done. Yesterday was a good example for me. As I'm practicing forex on a demo account, I thought I'll be smart to Buy and Short at the same time, and I placed the Long and Short orders with stops. When I checked the account in the morning, I've lost. Had I respected the trend which I spotted, I really would have made money. I know a lot lost yesterday because they had bet the opposite of the trend, thinking they can change the trend. In the market you can't think that you are the one who is controlling, because it will not work.

ASI held it's higher highs, and higher lows for the 3rd day. This is encouraging given the negative sentiments that prevails right now.

SELL, SELL, SELL - AEL at 24.00

On the 10th of December 2015, I posted the following:

AEL - Resistance - 24.00, Support - 22.00, in between return - 6.6% 

AEL took a hit in early 2015, when the stock fell to 18.50. Since then 22.00, had succeeded in supporting the stock on several occasions. During the last 12 months it had moved to 28.00, but 24.00 has been the short term resistance level. Between 22.00 and 24.00, you have a 6.6% return, nett of Cost. Entering @ 22.00 to 22.50 with a target of 24.00 opens a decent trade for the short term.Any down side below 22.00 may not be wise to hold. Hence the stop is 21.90.

Today's close was 23.50, and traded at a high of 23.80 intra-day. The closing price of the stock was 22.40 on the 10th, and some managed to grab around that during this time. I suggest to take profits between 23.80 and 24.00, which is +/- 6% in 5 Market days.

 

500sma on the ASI survived to hold. But it is still too Fragile.

Doom and Gloom was evident in the ASI since the 19th of August of this year to the present. The persistent damage is so frustrating, as it is giving the indication of a slow death. As mentioned in my previous posts, the only sigh of relief is that it is going through a painful correction. The question is whether the tides are changing. The Index broke down through the 100,200,and 300sma's in rapid intervals. Then it took some time to break down through the 400sma, and failed to hold on to the significant mark of 7000 points. The critical area of 6800 points was tested during the last few days, and succeeded to hold that level as the present support. The next important development we see now is that this area of 6800 range is the average level for the last 500 days as well. The index survived to close above the 500sma today. Now that's a relief, but still too fragile.

John Keells Holdings - Watch

From a high of 191.00, JKH retraced to todays low of 173.70. It will be interesting to see whether this will be the lower low in the present down trend, as only on 3 days the counter closed above the previous close within the last 15 days. This is an indication of 12 days of consecutive down days. Worth watching.

Royal Ceramics traget of 5.8% in the short term

The confidence level for Royal Ceramics is increasing slowly but surely.As the counter got battered right down to 100.00, from a high of 137.00, many ignored this fundamentally strong counter for a while now. But today it came out of the slumber to open at 107.00 and dip to 105.50 before it caught attention of many traders, to propel it upto 111.80. The close was 109.50. From the time it got supported at 102.00, we saw relatively small volumes in the region of 12,000 to 34,000 shares trading between the 2nd of Dec and yesterday, whilst today the volume was around 32,000 shares. The present resistance is at 112.00 but if the same momentum prevails tomorrow, we will see it breaking that with ease. As the 50% Fibonacci retracement level from the top of 137.00 to 100.00 is around 118.50, and the fact that the 100 day simple moving average is also at that, I expect the stock to test 118.50 in the short term. If one could enter at today's close of 109.50 it will be a ROI of 5.8% in the short term. Based in the past RCL could move to this level very fast, even in a couple of days if the activity is high.

Performance of the Indexes and Stocks covered so far

As at 29.01.2016

TJL - Potential to trend up again

TJL has been in a long rally since January 2013. Stock is trending with minor corrections till now. The last being from the 23rd Nov to the 2nd of Dec. We can see that there had been 2 swing low points from the 1st of Dec to the 9th of Dec. The lower low being 33.80 on the 2nd instant, and the next lower low being .10 cents above that at 33.90 on the 8th of Dec. As long as it stays above 33.80, it could retest the previous high of 36.30. From 33.80 to 36.30 it is a nett return of 5%, and if it happens within the short term it could be an interesting return. But anything above 34.00 it may not be wise to get in to sell at that. Unless it breaks out and move to 36.90, and thereafter to 38.80. Realization of a break out and a movement of that nature in the short term can be highly ambitious, but in the medium term it could happen, based on the rally that the counter is in. Let's watch how it goes.

TJL 3 months movement

TRADE IDEA - MGT - 8% IF ENTERED @ 21.00

MGT has a good growth story. With a beta value of 1.36, presently it indicates as a stock with higher activity. On the 10th of Dec the stock hit a lower low of 20.70, whilst the 9th Dec close was 21.00. On the 11th the close was higher at 21.20. This looks a decent swing low setup. Therefore it looks a potential short term trade target.

My setup is as follows:
Enter - 21.00 to 21.50
Exit - 23.20.
Stop - 20.70.
This setup is valid for a short term trade, provided that the stop is executed at 20.70. However for those who would want to hold it is advisable to average down.

Trade Idea -Sierra Cables - Had given 18 to 20.5% returns twice in 2015

Price of Sierra Cables took a hit during 2014. But on the 2nd of January this year, the stock broke out of 3.90 to 4.00, pushing it upto 5.00. Thereafter the counter retraced to 3.90 and 4.00, which acted as a support. During this time the RSI also retraced to 24 points. From there onwards it rallied upto 4.70, giving a return of 18%. Once again the stock retraced back to the support of 3.90 and 4.00, AND rallied to 4.80 during July to August '15. It retraced back again, and now taking support at that magical figures of 3.90 and 4.00, with the RSI falling once again to around 25 points. I take this as a trade idea, and it is as follows:
Enter between 3.90 and 4.00.
Exit between 4.70 and 4.80.
Stop at 3.60.
Target return is 18 to 20.5%
Loss if stopped is 9.60%.
It is critical to have a strong stop when trading.

 

AEL - Resistance - 24.00, Support - 22.00, in between return - 6.6%

AEL took a hit in early 2015, when the stock fell to 18.50. Since then 22.00, had succeeded in supporting the stock on several occasions. During the last 12 months it had moved to 28.00, but 24.00 has been the short term resistance level. Between 22.00 and 24.00, you have a 6.6% return, nett of Cost. Entering @ 22.00 to 22.50 with a target of 24.00 opens a decent trade for the short term.Any down side below 22.00 may not be wise to hold. Hence the stop is 21.90.

LHCL - Trade Idea - Short Term - 5.7% - 6.7%

LHCL has been moving since 5th of November. Present movement occurred from the 4th of December, starting at 59.00, and moving upto 61.90 the 7th. The stock moved into consolidation from the 9th, and moved within 60.90 and 62.00.
As of now it appears to be holding at 61.00, and appears to the present support. The stock is trading within 50% and 61.8% Fibonacci range. The support in the present up trend is 58.70, which was the low of the 3rd Dec. If the resumption of the trend takes place, I expect it to test 65.40, and 66.60 in the short term. The Trade Set up is as follows:

Enter @ 61.00
1st Target @ 65.40
2nd Target @ 66.60
Stop @ 58.70.

The 1st target will give an after cost return of 5.7%, and the 2nd will realize a return of 6.7%. If the set up fails the stop loss will be 3%.

In a short term trade, it is very critical to have a strong stop loss.

All Share Index - Still on a correction. But 65 points away from the Year to Date low.

Today's close is 6825 points, we are heading to a major Psychological Support of 6800 points. A failure to hold there, will lead it down to test the year to date low of 6760 points.
As mentioned in my earlier post, a correction is a
10 to 15% drop from the 52 week high.
The 52 week high was 7670 points.
There were 2 prominent down trends in the whole of 2015. 1st was from the 12th of January 2015 to the 31st of March 2015. There were 51 market days in that period, and on 18 days the market was up, whilst on 33 market days it was down. 910 points dropped during this period, which works out to an 11.86% decline.
The next decline was from the 19th of August 2015 to date. There had been 79 market days, as such it is the longest decline thus far. During this period the market went up during 29 market days, whilst it was down on 50 market days. Ironically the drop from a high of 7531 to the present 6825, is 706 points, and 9.4% only. Which means even though the period is long the % of decline is lower than the earlier decline. As the length of these declines are relatively long, the psychological feeling has become painful, and anxious.

However the performance of the market indicates a correction, although it is a painful one.

Com Bank - The Hornet's Nest

COMB - IntraDay 09/12/2015

As one of the liquid Companies in the Market, the need for Commercial Bank to stay at and above 140.00 is critical. Else it will open up a hornet's nest in the Market. As I've mentioned in my last post on Commercial Bank, 140.00 was a major level that was broken in Jun '2014. After the break out which happened on the 27th of June 2014, only once it came down below 140.00, to 139.00 on the 18th of July 2014. Since then it was today that the stock re-tested 139.00, when just 300 shares were traded at 139.90. This is obviously not a good sign for the Counter, and the Market in general. However one thing I must note here is that, it should close below 140.00 with strong volumes, for the Bears to take control of it. This did not happen today. However the present behaviour of the stock is not at all encouraging. Any strong break down, will open the stock to fall to 130.00, where there is a visible strong support. The reason why I think it wont happen immediately is the lower RSI levels.

ALUMEX - ROI - 19.43% in 6 to 12 months.

A SOLID LEADRSHIP IN STRENGTH, IN SUPPORT AND IN DEVELOPMENT. AT ALUMEX, THE YEAR UNDER REVIEW WAS ONE THAT SAW US GROW AND SECURE OUR POSITION AS THE UNDISPUTED MARKET LEADER THAT SURPASSES THE REST. AND AS WE CONTINUED TO DEVELOP ON OUR RANGE OF STRONG AND DURABLE ALUMINIUM PROFILES, WE STRENGTHENED OUR PRODUCTION PROCESS BY INVESTING IN A STATE OF THE ART POWER COATING PLANT THAT IS THE BEST IN ASIA. TOGETHER WITH A TEAM THAT IS GEARED TO SUCCEED AND A VISION THAT IS FOCUSED ON EXCELLENCE, WE WILL CONTINUE TO SOLIDIFY OUR LEADERSHIP IN THE HEARTS AND MINDS OF ALL OUR STAKEHOLDERS...... Alumex Annual report 2014/2015

Alumex Plc is relatively a new entrant into the CSE. The stock started trading on the 31st of March 2014, closing that day at 14.20. The lowest price during that period was 14, and hit a high of 19.70, on the 24th of July 2015. That is a return of 37.6% in 16 months. Thereafter the stock has moved within a range of 17.10 to 19.40. Presently it is trading between 17.40 and 17.70, in thin volumes. 

Alumex is the market leader in their field of Business. Under the leadership of Hayleys Plc, this will have an exciting growth story. Also being a player in the construction industry, they have many opportunities to grab.

Due to this potential advantage, this counter looks poised to give value to investors and traders alike. At the present low of 17.40, it has retraced a little over 11% from the peak of 19.70. This looks a more corrective trend in nature. Looking at the previous trend from a low of 14 to the high of 19.70, the stock had completed 152.5% of the uptrend that had taken place between July'14 and Nov'14. In a bullish trend it is very common to see for the price to move up between 138.2% and 161.8%. If Alumex could benefit from the growth in the Construction industry in 2016, and start growing their profits, we could see the price moving upto the said areas of 138.2% to 161.8%. Which is between 21 and 21.70. That is a return of over 16.63%. It is also important for the counter to hold the present low of 16.90. Trade Idea - Average down from 17.60 downwards. 1st exit at 18.90 for a short term target of 5% after cost within 3 months. 2nd Exit at 20 for a target of 11.10% within 6 months. 3rd Target at 21.50 for a target of 19.43% within 12 months.

Why I like Technical Trading and respect Fundamental Analysis

This topic may be important to every one, hence I thought I should give it a start.

Personally my experience is that, if i want to get serious about the Sri Lankan Stock market, the most important thing to know is fundamentals of a company. For me it is really important. However knowing only Fundamentals did not help me when I was buying and selling stocks. As my experience spans more than 20 years, and from the early part of '90s we were trying to spot the right combination to buy and sell without getting caught in the middle. I can remember in the late 90's I was given a piece of paper with an article on moving averages. I found that there was something in it which will allow me to buy and sell according to the price movements. But I had to personally write the open, high. low, close, as the CSE was not providing that info, They started it from early 2000's. Since it was a big and a messy project I gave up after a while. But today it is not like that. Since we did not have technicals those days, we had 3 main things to buy and sell. They were fundamental Analysis, Media, and RUMOURS. As such the moment technicals were available in Sri Lanka and I managed to get the software thanks to the brokers who gave on line trading, I fell immediately attached to it. Now every day is a learning day for me on technicals. I think year on year the level of knowledge I gain about it is on the rise. Also day by day the number of people who gets in to it is increasing as well. That's great.

Here is why I like Technicals, as a person who respect Fundamental Analysis.

1. It gives me independence - my chart is my friend. So I don't care what the rumours or media or any other will say. That has never helped me as much as what the charts have helped me.

2. Prices and volumes tell it all. Market is always right. The reason is that any time some one gets to know something about the market or a stock. Then that reason is reflected in the price and the volume. So the market is like the big ocean, like every drop water flows to the ocean, every bit of news good or bad flows into the market in the form of price and volume.

3. Trend can be identified. As I increase my knowledge, identifying the trend is easy. Which helps me to trade or invest with confidence.

4. Helps me know why I should sell or Buy. Based on trend analysis I can decide on the Buy or Sell price.

5. My faith and Confidence increases. As such my interest in the Stock market enhances.

To some it up, the knowledge and the importance of Fundamental Analysis takes to a higher level, by expanding the knowledge and practice of Technical Analysis.

LFIN - went up 8.5% Since recommended....Came down 2.54% since then

On the 23rd of September 2015, I made a buy call on LB Finance. With 2 targets of 140.00, and 150.00 respectively. My expected period was 12 months since the recommended date.

We have not come to the target levels just yet. However the counter moved up to a high of 128.00, 18 days after the date recommended. That is a ROI of 8.5% in just 18 days. During this period the stock fell to 115.00, 4 days after the recommended date, on the 30th of September 2015. It was a loss of 2.54%. But my trade idea was to Average down, as the Company was poised to make more than 20.00 of profits per share, as at 31st March 2016. They are a good dividend payers, and I expect them to give out 8 to 10 rupees on Divs too.

Presently the stock is retracing, due to lackluster trading, and also the uncertain impact the new developments stemmed from the 2016 budget proposals.

I personally believe LB Finance to make the maximum benefits out of the opportunities given to them from the said budget. As such the trending down of the price is a healthy opportunity to grab the stock based on Averaging Down method.

It will be interesting to see whether they still could make 20.00 profits per share, which should be closely monitored.  But with increased momentum in the overall market could lead the price to move to my targets of 140.00 and 150.00.

I too expect the market to resume increased activity in Jan'16, like some do. Therefore buying into LFIN for a short term target of 125 to 128 will be a decent trading shot. But you must buy between 115 and 118, during the present down trend. If you get below that, it will still be ideal.

Commercial Bank from a Technical angle

As the market is so weak and without any excitement, anything is looked at with a negative mind, and pessimism.This is the case with Commercial Bank too. Given the not so great opportunities from the budget, Commercial Bank performance can be viewed as at "Cross Roads". Therefore from a fundamental perspective, proper direction and clarity can be seen only after a few Quarters into 2016. However if you look at it through Technical Analysis, it gives a "not so dismal picture".

You see, the Banks were the ones who took the Market up from 4725 points in June 2012 to 7600 in Jan 2015. Thanks to the Banks the ASI and the SPSL 20 went up. But did you know that during this period the Banking Sector went over the 2010-2011 all time levels, when the ASI was below it's all time high levels??? As a matter of fact the ASI did not follow the banks to break the 2010-2011 all time highs, but the Banks did.

So what happened? when the rest of the market did not give the banks a run, obviously the banks chickened out and moved sideways. Banks were everybody's darling. All wanted the banks to dance for the rest to join.

In 2010 Sep-Oct period Commercial bank hit a high of 147.50(adjusted to splits,and scrip divs), and retraced below 100 during the ugly 2011-2012 period. But with the market, steaming up from June 2012, the stock broke the resistance of 140.00 in July 2014 and propelled it self to record a new all time high of 194.00 on the 12th of January 2015. So when the market is not moving, obviously it too had to retrace. But the best thing is that it has now come down to the major long term support of 140.00.Moreover the RSI is also at the lowest in 7 long years. 

I do not recommend a buy on this, but it is damn good to keep an eye on. The reason is that Com Bank is one of the biggest Banks, and has a big say in the direction of the overall market.

For any position to decided upon, the support at 140.00 is so critical. Any moment it falls below this level, will not be good. If the stock holds at that strong pivot of 140.00, then in the short term, meaning from now to the 1st or the 2nd week of Jan'16 it could test 150 to 155. So for any one who wants to move in to it at 142, a strong Stop loss at 140 is critical, to exit at 150. That is a return of 3.27%.