LIOC - swing low is 30.20, can go up from here

In my last post we discussed that the LIOC had bounced back from 30.00 on 2 occasions since 5th of May 2015. This time it has turned around at 30.20, thus forming a swing low at that. This formation with a lower RSI in the ASI and the shortening histogram MACD bars in the Stock makes it an interesting formation to the UPSIDE. For a short term trade can buy between 30.50 and 31.00. If your strategy is a Swing Trade, your stop needs to be at 29.50.

LIOC came down to 30.00 and bounced - 2 times since May 2015.......

On the 5th of May 2015 LIOC hit a low of 29.00, but thereafter the price got strongly supported around 30.00, except a few trades around 29.70 or 29.80. During this period between 5th May 2015 to date only twice the prices retraced to the area of 30.00. On both occasions the Stock rallied giving some pretty decent profit margins. Good news coming your way is that it is once again dropping towards this magical figure of 30.00. The ideal scenario is to wait for the price to touch 30.00 AND WATCH the histogram bars of the MACD,  when they become shorter start Buying. Another point to watch will be the SWING LOW, while the MACD histogram is shortening when both occur you have a good short term trade. Good Luck on these trades.

How to trade with the RSI - this could be profitable to you

RSI is called a lagging indicator. But you can certainly profit from it. In Sri lanka a lot of people say to BUY when the RSI is below 20 and Sell when it is above 70. If you had traded it that way you would known that it is easily said than done. However this lagging indicator is not to be ignored. How can you make use of it? This is how.


Step 1 - In the ASI chart you wait until it comes down below 20, like in the figure 1

As you can see in the Chart the RSI has gone down below 20 on 4 occasions during this year. The dates are 11.01.2016, 02.03.2016, 29.06.2016, and 18.11.2016.

Step 2 - Choose your stock that you would want to trade, then draw vertical lines on these days, like in the figure 2.

Step 3 - Watch for the swing low of the Stock's Price line. See figure 3.

As given in the Figure 3 all 4 occasions made money. The profit you would want to make is your call. But it is very very important to stick to the stop loss.

It is not only the swing low that can be combined to the RSI, lets see some others in the future.

JKH.N.0000 - Interesting developments in the Price line

As can be seen the Trend is still Bearish for JKH with more lower highs and lower lows. However it is trying heavily to be above the 100sma, and stay above it for a longer rally. But it is not so just yet. The prices must be above 20,40, and 100 sma lines to really say JKH is on a roll. Presently it could check 145.70 down to 143 levels before hitting up to test 155.50 again. If it happens with big volumes then it can move towards 158.80, thereafter things will be really great to watch. But as for now let it slide down till a higher close is seen.

TJL.N.0000 - Teejay Lanka Plc - Bearish not a trend failure

TJL is having a massive rally since June 2012. It broke out of the 100sma during this period, and had respected this line up until the beginning of 2016. But in March 2016 the price line went above the 100sma line once again. On Friday the 16th Dec 2016, the price touched it again, as such the trend is still in tact as long as it is above this critical support line. However the present trend has more LOWER HIGHS, as long as the lows are going to be giving higher lows, followed by higher highs the Stock will not resume the uptrend. If Friday's close above 100sma to be the support then it can retest the present downward sloping purple trend line at 45.50. And anything above that will be bullish for the counter. As long as the stock is below the purple trend line the stock price could fail to rally and come down to 40.00, 39.00 and to a minimum of 37.60. I like to watch this stock.

8000 views ........ Thank You

My dear readers it is a pleasure to notice that the views in the blog surpassed 8000 just in the first year since I started posting frequently. A BIG THANK YOU FOR DROPPING BY. It will be a great pleasure to serve you more if you can give me a few suggestions to include and improve to cater to your interests in the coming year. Please be kind enough to do that in the comments below, it will do a world of good to all. Could you do that please....

Can COMB.N.0000 respect the 100sma

Since the 12th of July 2016 COMB.N.0000 had traded above the 100 sma. This up move has been holding todate. But had been struggling to break above 145.00 forming an Ascending Triangle. Stock needs to respect the 100sma which is now at 140.70, IT MUST HOLD. If it closes below this level with strong volumes then it will Technically be bearish. There is also a major support line at 140.00, hopefully this would hold in order to sustain the bullish bias trend. On the upside we can expect it to test 150 in the short term should the resistance at 145 be broken with strong volumes. 140.70 is an area to enter based on a strong support at that point. This needs to be watched closely.

ASI took a breather

All Share Index took a breather today, as a pullback looks a good sign within a trend. As such the next 2 to 3 days can soften the pace. Month of December has not been an active month for obvious reasons, but had trended up on many occasions. This could be experienced this time too. Hopefully. Let's see how the month progress.

ASI recovered.........

So the last post with a chart shared with me by Mr. R.T. did benefit those who followed the short term market direction. At present the ASI is heading towards 6400 points, closing at 6370 points today.
An increase of 138 points in a matter of 3 days is beyond the recent past average movement. Although it is bullish, the risk has become high for the traders. Present trend suggest an up move above 6400 but breaking out with pullbacks need to be aware of.

ASI Prediction - Posted by a Client

As a gesture to honour a client Mr. R.T., I post an image shared by him regarding the ASI. The primary reason to do so is that, He is a keen learner of  Technical Analysis and had always wrote back and thanked me for what I'm sharing. He is no more a student and even I get myself educated by him. That's how technicals work. No one can say I know it all as Technical Traders, we are learning every day.



The chart is given below:

Potential Stocks - Present Status

3rd of November 2016 I posted an article captioned "Some potential Counters", covering 5 Stocks, namely AEL, LFIN, TKYO, ALUM and GRAN. Traders had a tough time making anything out of these counters.
The present status of them are as follows:

AEL.N.0000 - Support areas were 26.00, 25.00 and 24.00. They were major psychological barriers for the counter. In order to maintain a strong momentum these levels had to be supported. But both 26.00 and 25.00 were breached, and came down to as low as 23.80. A fare number of shares are trading at 24.00 at present. The Price 24.00 was the stop loss for the Traders, and had to be followed. As such it was not successful for Traders. However the drop is offering the medium to long term Investors the opportunity to collect.

LFIN - This counter was offering a huge discount to it's value at the time I posted on the 3rd. It is even more attractive now as the price dropped to 120.10. There was no Stop Loss mentioned for this stock, as it gives a massive discount at the present Price levels.

ALUM - As a young Company ALUM gives ideal value for the medium to long term investors, but the Traders did not win this time as it had to be stopped at 19.80.

TKYO - Traders suffered here too, as the stop at 59.20 was triggered. Here again the opportunity for the Investor is great, since TKYO is doing very well in the present.

GRAN - This is a stock that's been traded heavily during this year, but the traders missed this time around as it got stopped at 89.60.

All these stocks have an immense amount of upside but not for the Trader. Therefore looking at these counters must be taken with atleast a holding period of 12 months.

ASI FAILED TO HOLD 6378 - Not a good sign

It was very important for the ASI to sail above 6378 points, if we were to see it crawling up towards newer highs. But it FAILED. Unfortunately the circumstances prevailing in and around the Market Sentiments are SO PESSIMISTIC, as such the pounding by the bears was no surprise. As we are moving into the lackluster December will rub the wounds of the bulls even further. Rate hike (EXPECTED) in the US and newer tax hikes in the SL will not sound well for the bourse in anyway. The present status is not the ideal for Buyers, whether they are traders or investors. As the Index is moving south the RSI is cooling off, and sits at 29 points. We have seen it falling below 20 points on many times during the last 2 years since the Present Government took control of the Country and the Economy. RSI fell 3 times below 20 points since 9th January 2015 alongside the dwindling sentiments and painful changes and developments taking place in and around the Globe. Strong and robust markets are evident when the Economic growth is on track. Sadly it is not so at present. However the early signals of change to the better can certainly augur well, but not visible in the distant future. A sigh of relief was that almost all the Major Companies have done very well in the September Quarter, but brought a blur in the direction they are heading in terms of profit growth with new Tax proposals. My earnest hope is that we will see clearly how the Companies will fare very soon, not in my dreams but really.......This Country needs new and large Investors, investing and creating jobs. If only Sri Lanka was in existence in this planet then we would not have any problem to see Large investors queuing up to open their Factories here, but I think there are 100s of Countries telling these Large Investors that their taxes are low and invest BIGly. As such they go to those Countries. I wish they will not do that and come here as well. Now I have realized that LAWS and TAXES can MAKE or BREAK a Country. May be it doesn't apply to Sri Lanka.

ASI can reach 7160, must hold 6378

There is nothing much going on these days in the Market. The sentiments are not so great and the confidence level is down, hence trader activity levels are at record lows. Amidst the negativity the fundamental's of the large and prominent companies are improving and continue to create more wealth and higher Nett Asset Values. The pessimism is allowing many investors to grab stocks which will make their investments worth in the Long Run. ASI had an above normal spike on the 2nd instant, with a rise of 34 points. This had paved the way for the index to stay above 6400 points. Holding above 6378 points is critical in the Short Term. The momentum suggest a slow uptrend to test 7160 points in the next 6 -12 months, with an overshoot to 7395 and 7700. A lot of individuals prefer to make quick money though they know that quick money do not come by all the time. An approach of shopping for bargains will certainly make ones efforts rewarding. But it is only for those who would have more knowledge than greed.

Some potential Counters

The below list of Stocks can give some decent returns. Please go through and do the needful.......

AEL.N.0000

26 is an important support for AEL.N.0000 but it is under threat, the next support is 25, and looks like 25 gonna be a strong support based on the performance of the recent past. Stop is at 24.00, and entry is between 25 to 26 due to the strong fundamentals. Near term Target is 28.50 based on the fib extensions and a medium term target is 32 based on fundamentals.

Buy – 25.00 – 26.00, Sell – 28.50 (Within 3 Months), 32.00 (within 4 to 12 months), Stop – 24.00.

LFIN.N.0000

With Strong Fundamentals, we do not expect to have a Stop Loss on this Counter. Expect 135 to be broken in the Short Term and Test above 140 within the next 12 Months.

Buy – 127.00 – 129.00

Sell – 135 (Short Term)

Sell – 142.00 (Within 12 Months)

ALUM.N.0000

Consistent Profit Growth makes this stock attractive. Strong uptrend is evident since March’16.

Buy – 20.60

Short Term Stop – 19.80

Sell – 23.30 (Short Term)

Sell – 25.40 (Within 12 Months)

TKYO.N.0000

Uptrend is visible since March ’16. Strong fundamentals makes this counter an attractive counter, which could give a decent return in the Short Term to 12 months.

Buy - 61 - 62.50

Short Term Stop - 59.20

Sell - 68.90 - 73.50 (Short Term)

Sell - 75.00 - 78.80 (Within 12 Months)

 

GRAN.N.0000

Increased demand for poultry and lower Cost of Raw Materials makes this counter attractive. The encouraging Earnings per Share makes the Present Prices cheap. As a trading counter it offers short and medium term opportunities.

Buy - 91.00 - 92.50

Sell - 100.00 Short Term

Sell - 115 - 120.00 (Within 12 Months)

Short Term Stop - 89.60