Strong Accumulation Signals in Mothersumi suggest the beginning of a Strong Upside Rally!

Dear Reader,

Hello again!

The daily chart of Mothersumi is showing the beginning of  a new uptrend on the daily chart. Signs of accumulation are evident. The image below highlights the same.

Mothersumi on 13.06.19 showing accumulation signs

This is a very basic set-up often observed at the beginning of a strong uptrend. The big cats are buying the stock and hence the swell in volumes.

Mothersumi was an all time favourite of investors until the dawn of Electric vehicles brought its twilight. The stock has corrected almost 60% over the past 18 months from the high of Rs. 260.
Currently, the first resistance lies at level Rs.128. A sustained closing above this level would mean a confirmation of the uptrend trend. Accumulating the stock at this level is an opportunity rarely spotted!

Another positive is my favourite RSI positive divergence at the bottom. It is evident in the above chat (not highlighted) that when the price marked the low of Rs. 113, the RSI did not forge a corresponding low but took a support at the level of 30 indication a positive underlying momentum.
This combination of positive divergence in RSI and accumulation in volume is a pretty sure shot way of identifying stocks in the early stage of an uptrend.

Mothersumi is a great company with a top class management team. Following this article I will continue to share the news updates and subtle changes which reinforce/oppose this bullish view.

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Bottoming out formation in BIRLACORP. CMP-Rs.555, Headed for Rs. 680+

BIRLACORP has bottomed out in the charts. I have been following this stock since Rs. 452. 1) The beautiful RSI positive divergence near the bottom was the first indication of a bottom after RSI went oversold. Usually such signals help identify horses for long term. The last time one such signal turned up was in the charts of Balrampurchini.

2) The formation of higher lows is another indication of an uptrend forming. The stock has moved up almost 10% in the last two trading sessions alone.

3) Another positive factor is that the volume picks up during uptrend in the stock.

4) RSI has also undergone range shift and is oscillating in the range of 70-40 instead of 60-sub 30 levels.

5)Pitching for early target of 680, this stock held the support of 491 very strongly during the correctionary phase before spurting ahead in last two sessions.

REC Ltd follow up- 34% return and counting

Hello Readers:

Since the first post on REC Ltd (HERE) the stock has return over 34%. It touched Rs155 recently. I am sharing below a quick update on the call.

Please share you feedback/queries if any

Email: kchamaria1993@gmail.com

Rec Ltd. Weekly chart. After a strong rally, a temporary correction may now ensue before continuation. 

Nifty 50 Analysis: Drawing a plan of action

Dear Readers,

With the festive season behind us and the elections ahead, the market is in a lull state. Many are talking about 'action' coming back as elections draw closer and given that, it is only prudent to have a plan of action ready.

I have presented the hourly chart of Nifty50 below for analysis, but before we begin I would like to draw your attention to the indicator I have primarily used for this analysis.

Over the past few months, I have figured a new moving average about which you will not have heard anywhere else. This exponential moving average is exceptionally long, but works beautifully on daily and hourly and even shorter time frame charts. The 600 EMA is 3x longer and 3x smoother than our favorite 200 EMA, and if you listen to me, this will soon be your 3x favourite too. You can use the 600EMA label to search my blog for other posts mentioning this magical moving average and deciding the effectiveness of this underrated moving average for yourself. 

Coming to Nifty now. In the chart attached below, the red arrows are clearly marking the resistance which the 600EMA  has posed for Nifty on every rally. The one instance when the 600 EMA was breached was apparently an instance of a fake breakout. The ascending triangle visible on the chart is capped by 600EMA and upward trendline is providing it support. This is a classic ascending triangle. Now this is a continuation pattern. 

The market as I see it now is quite weak. The first support has been touched. A sustained breach of 10770 on closing basis would take the index to 10540 and also mean failure of the pattern which will lay the ground for deeper correction. I am betting on the failure. 

However, if the pattern succeeds, then on the event of a strong upmove above the 10870 level , with a closing on the daily chart , a proper throw back and subsequent continuation should take Nifty up to 11750 again. 

Nifty Hourly chart, captured on 10-01-2019

That is from my side on Nifty. Please do share your outlook on the index and the general direction of the market. I have been bearish since 11700 level. I was bearish at 10600 also and I will continue to be bearish till nifty does not break the 10000 level!

Disclaimer: I am holding a Nifty JAN 10300 Put. 

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That's all for today! Adios!