Punjab Alkalies and Chemicals Ltd (PACL)- A Tale of Triple Support and Promising Signals

Hello Readers!

Punjab Alkalies and Chemicals Ltd. (PACL) fell almost 75% from its lifetime high of 85 and took support at 21.50. 

Since that bottom, PACL has ensured in an uptrend. 

RSI is in the bullish range oscillating in the 40-80 range from the previous bearish range of 20-60

PACL is currently on the support trendline it has respected on the past three occasions as circled in green 

A closed look at the daily chart below indicates that the support is very strong due to 3 reasons:

1) The presence of the 200 EMA (exponential moving average) is a strong technical indicator and has often proven to be a reliable one.

2) During the last leg up PACL broke out above the 200EMA with a gap up (highlighted by the circle), and is now on the same level, making this a psychologically important level and therefore a potential price support

3) The up-trendline as discussed above and highlighted by an arrow in the chart below is, of course, evident support. 

These pieces of evidence from the moving average, trendline, gap ups, and most importantly, from RSI, when grouped together, are enough to hope that the stock will reverse and trend higher. 

To provide for whiplash, I would lookout for a closing lower than Rs. 38 in the stock to reconsider the analysis, but until then, I will continue to be hopeful of the stock scaling up to Rs. 85 again. That is a potential upside of 88% from the current stock price of Rs. 45!

Thank you for reading, please leave your comments below if you enjoyed it. 

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Regards,
Kavita Chamaria
kchamaria1993@gmail.com

 

Crude Oil Update & US leading Renewal Companies

The article below was written for the 7th edition of the Energy Insights Newsletter- EnSights. The newsletter is circulated to select employees in Royal Dutch Shell- where I work as an Economic Advisor- in order to share my technically driven insights on the global energy industry. 

Hello Readers,

The energy paradigm continues to change every single day. Keeping an eye on the energy sources of the past, present and future is ever more important to timely spot opportunities and make sound investment decisions. In this article, we start with a look at crude oil - to gauge where it might be headed, followed by the technical analysis of a few clean energy companies. 

Crude Oil update

In the previous article, we discussed the grim future of crude oil while it was surfing at the level $42- $43.80 in August. Post that article, crude glided lower and found support $36 in September. While this 18% decline was swift (over 5 trading days), crude has since then been oscillating in a broadening triangle pattern as shown on the chart. The bound lines are noticeably diverging from each other with $42 posing a clear resistance to price. A look at the momentum indicator, RSI, indicates that weakness in crude oil price will continue as RSI remains shy of 60 (the bearish resistance zone on RSI). From this point onwards, we expect a decline in crude oil prices and approach support at $34.50. The current market price of crude is $41.31, price resistance is at $42 and the support is at $34.50.   

Next, we cover the analysis of the clean energy companies covered in the article above.

Nextera Energy Inc. – 

This stock recently split 1 to 4 effective from 26^th October’ 2020, helping improve liquidity. Even though clean energy continues to hold the centre stage in business discussions, the stock price of NEE is not showing promising signals in the near term. Please refer to the above chart- The stock continues to oscillate in the ascending channel for now, but weakness in price momentum is evident by its failure in touching the resistance trendline (red) after rallies and breaching the support trend line (green) on one occasion during a correction (circled). The Relative Strength Index (RSI) is showing negative divergence - meaning the RSI is moving lower whereas the stock price is moving higher (yellow lines). If the stock price ends below the level of $74 on any day, that would substantiate this observation of suspected weakness to ensue in the prices and indicate temporary correction.

Brookfield Property Partners LP

The clean energy theme has buoyed stock prices of sector leaders in the renewable energy space and BPP is no exception. Like NEE, it has been moving upward - bounded by a channel- and posted 60% return YTD amidst COVID-19 pandemic. As we can see in the adjoining chart, there are two indications of price weakness in the near term. 1- the stock recently touched the resistance trendline (red arrow); 2- the negative divergence between price and RSI. The slowing momentum over the past few days is strong evidence to believe that prices might reverse for a correction soon to meet the support trendline at $12. The current market price is $16. Price is yet to confirm this theory and a move below $14.9 is the confirmation we seek.

First Solar Inc. 

The largest clean energy player in the US, FSI posted YTD returns of 40% till date, This is an under-delivery compared to the potential this stock holds. Referring to the above chart, the good news is that the stock price has given a breakout from a 7-year-old trendline on 12^th Oct (blue circle). Currently a pullback, from the resistance trendline is unfolding towards the two support trendlines waiting at $69.45, after which the stock is expected to continue its journey upwards of $100.

SolarEdge Technologies Inc.

SEDG is a stock with strong trending tendencies. The YTD return itself is 118%, but if you looked closely it has rallied 350% from the low of March ’20 of $70 to the recent high of $315 in just 7 months. Looking at the daily chart we can see the stock has been correcting recently and is headed for the support level at $208 (35% correction from $315). Coincidently, the level of $208 happens to be a cluster of supports re-enforcing its strength. If $208 is breached, then the next support would be $180. However, the charts do not feel like they might need the support as the momentum indicator is signaling strength and resilience in the stock price which means that an upside rally may soon be witnessed after a little more correction.

Enphase Energy Inc. 

ENPH has posted a perpendicular upside move since June 2017, clocking in a mindboggling 15,788% gain for investors who got in at the right time. Having noted that, the rally is far from over as of now. A quick look at the recent price data on the daily chart reveals that this stock has a long way to go before it truly rests. However, the momentum indicator – RSI, suggests that it may be time for a minor correction in the stock price indicated by negative divergence. A short-term correction is expected from the current price level of $120 to $96. On the face of it, that is a 25% correction, which may be a lot for other stocks, but is a mere nail trim for Enphase Energy.

After going through the few stocks covered above, the growth trajectory of the clean energy sector stands out vividly. The sector might experience a mild correction in the near term, but the long-term prospects continue to be attractive and promising. 

Thanks for reading! Please leave a comment below !

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-     Kavita Chamaria     

      Email: kchamaria1993@gmail.com

BHEL- A great opportunity

UPDATE 1- 13TH OCTOBER 2020

Follow up on BHEL:

The stock moved below stated support- which is slightly frustrating, and also raises the question if we are dealing with a support zone instead of a level? this calls for a fresh look on the stock (red highlights).

A positive development on the hourly charts- RSI positive divergence. Price is forming lower-lows (downward sloping line on price, yellow highlight) but RSI is making higher-lows (upward sloping line on RSI, yellow highlight).

BHEL 2 HOUR CHART

______________________________________________________________________________

PUBLISHED ON: 6th OCTOBER 2020

Hello Readers!

BHEL’s hourly chart is indicating strength. It started correcting from 42.5- a strong resistance zone , and has fallen nearly 31% in the last 1.5 months.         

The consolidation (sideways movement) in the price observed over the last few days is backed by a display of strength in the momentum indicator- RSI. 

The relative strength indicator (RSI) is telling us 'Look ! relative to the past few days price is doing better' by simply by keeping its nose above 30 as highlighted in yellow. Every time RSI was below 30, BHEL's price kept slipping lower and lower as highlighted in red. This indicates a stop to the price slide. 

BHEL is offering a great risk-reward-ratio at this level. 

Current price -     29.30

Stoploss -              28.90  (-1.5%) 

Targets -               34.8 (19%) , 42 (40%)

Thanks for reading. 

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Regards, 

Kavita 

 

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 - A short analysis

Hello Readers!

Market is a house of mayhem as we know it right now. Even though today was a day to breath easy, I believe the worst is yet to come. 

Enjoy the read and do follow my blog by clicking on that blue 'follow' button at the right side of your screen!

__________________________________

 An analysis of Nifty 50

Nifty has corrected nearly 880 points from the top of 11770, that is 7.5% so far and has recently forged a low of 10866 which is below the monumental psychological support of 11000. Yesterday, things got even worse as the index closed below the fatal 100 daily EMA. Today, despite the recovery it failed to cross back above the 100 EMA even on an intraday basis and this shows that the 100EMA is now working as a resistance area.

Nifty Daily- Captured on 25-09-2018. Correction expected to continue. 

Highlighted on the chart, I expect the correction in Nifty to continue for another 500 points or so. The support thereby lies in the range of 10575-10500. There are multiple reasons for drawing this conclusion, along will a few conditions for the success of this analysis.

Purely technical reasons for expecting continued correction:
1) Breach of the 100 day EMA on the daily chart
2) Breach of the level of 40 on daily RSI, which is a support zone for the indicator in a bullish market
3) Breach of 10880 on intraday basis which was a strong potential support zone due to several factors

Some macro reasons for expecting continuation of this correction:
1) Continued weakness of Rupee
2) Bullish crude oil charts (analysis to be presented in a separate post)
3) Increasing tensions of tradewar plus the U.S. sanctions on Iran's oil industry puts India under alot of pressure as the alternatives are costlier (Read more here) 
4) State oil companies may reduce inventory in the face of rising oil price. But because they only hold 7-8 days of oil inventory, reducing that level will only control cost for a very short time period and will instead lead to increased cost in the face of further increasing oil prices (read more here). This will hurt the economy and naturally push up the oil prices and the cost of fuel further, aggravating the pain. 

Condition to this analysis:
A close above the 35 EMA (11350) will be a potential continuation of the uptrend and end of correction as it is an important resistance zone, though very unlikely as per charts, but we have got to keep an open mind when it comes to the stock market.

That's a short and crisp analysis for you. I will be coming up with a more detailed analysis of Nifty soon. 
Here's a teaser: It will include the Elliot Wave count and I believe the correctionary A-B-C wave is underway. So stay tuned! 

I also intend to come up with posts on the following: 

1) Take a look at Britannia because your evening snack just got more attractive!

2) Follow-up on Balrampur Chini which continues to impress! 

Thank you for taking out the time to read my articles.

You can find my detailed  analysis on three stocks- BALRAMPUR CHINI,  FRETAIL and REC.  

As a disclaimer, this isn't a recommendation but a mere observation of a great phenomenon unfolding on the chart.
Another disclaimer: I am long on Balrampur Chini and REC Ltd (bought after the above article was posted).
A warning: Anyone investing in Balrampur Chini, OR ANY OTHER STOCK/INDEX,  based on this article is doing so at their own risk. Please be responsible.

The Hot Retailer Stock That's Turning Heads of the Big, Bad Investors!

Hello readers!

Thank you for the support and encouragement sent by you guys on my previous blog post on Balrampur Chini posted on 24^th Aug (Link)

I have a quick post today on another stock which is making a buzz already. The big investors are already in on this for their share of this hot cake retailer chain.  I am talking about Future Retail!

Besides the hot-shot stories spinning out (Read more here) for Future Retail’s stock, the technical indications are also riding strong. It appears to be starting of the next big up-leg in the stock.

Let’s look at the cluster of evidences closely.

Future Retail daily chart captured on 28.08.18, cmp- 556.50

FRETAIL's stock has been in a consolidation for nearly a year now. During this period, the stock has found consistent and strong support at the level of ~470 and resistance at ~640. Going by that alone, the stock has decently taken support at the said level and turned higher making its path to the first resistance zone of 640. 

FRETAIL- 28.08.18 Daily chart close by view

Having established that stock is heading higher, lets establish why I think this move is a sustainable move.
Two answers:
1) The Break-Away-Gap
2)  Strong Volume on the Gap day

The gap up is a significant move here because the prices has been resisting the trio of 35,50 and 100 EMAs indicated by the blue, purple and red lines on the chart respectively. The gap not only let the price break out of this consolidation but also let it surpass above this cluster of moving averages. Now for those who are confused, moving averages are trailing averages of the past price data and pose as good support/resistance zones and also as lagged indicators of price movements. (Read more here)
The occurrence of this  gap with a strong display of volume (you will notice a tall green bar at the bottom of the chart) shows that there is active buying interest in this stock.

I am not laying down any potential target level for FRETAIL because I look at it as a long term opportunity unlike Balrampur Chini which was more like a medium term bet with a mere 100% rally outcome as per my study.

Let's also update you on how our Balrampur Chini analysis is doing.

Balrampur Chini - Captured on 28.08.2018 (Update 1)

The first post on this stock was posted on the 24th of Aug (Friday). After the post, at around 2:00 PM the stock was seen giving a strong run-up and closing +5% up. In the last two days the stock has been resisting the 100 EMA and as mentioned in the post on Friday, we continue to watch out for a breakout to confirm our analysis.

That's all from my end!

As a disclaimer, this isn't a stock recommendation but a mere observation of a great phenomenon unfolding on the chart.
Another disclaimer: I am not long on Fretail but long on Balrampur Chini.
A warning: Anyone investing in either stocks based on this article will be doing so at their own risk. Please be responsible.

The above observation is purely technical. Anyone with a fundamental insight on either stocks is invited to share the same, we can put up a collaborated article ( no pay for that :p).

You can reach me at kchamaria1993@gmail.com for the analysis of other stocks (NSE, NYSE, LSE as long as there is a chart), commodities or currencies, I will try my best to respond.

Until next time, Adios! :D

Balrampur Chini: Bottom fishing (A study of range shift in RSI)

Hello friends!

I am back with a post after a long period of dormancy. I was never off practising TA but wasn't writing about it for various reasons (like laziness). But now it's time to dust our sleeves and get back to business.

I have spotted a compelling chart which really got me out of the dormant state and urged me to post about it!

That stock is Balrampur Chini!

Please refer to the chart below:

Balrampurchini Daily Chart captured on 24.08.2018

I am a huge fan of the momentum indicator - Relative Strength Index (RSI) and it was RSI's range shift phenomenon which has drawn my attention to the chart of Balrampur Chini.

In the above chart, you will notice arrows marking the beginning of major rallies. These arrows are actually highlighting the range shift in RSI - the phenomenon wherein RSI breaches the overbought zone of 60 to indicate higher momentum in the stock at relative price lows and at the end of corrections. This change in stock participant's momentum- where the buying momentum supersedes the selling momentum, is captured by RSI beautifully.

On the chart we can see that out of the past 4 instances, only one instance has been a failure where the range shift 's indication of a rally failed. Some might argue that the sample size of the observations is too less to conclude the range shift phenomenon to be any good in the above case. If you're one of those people then I advise you check out the older data of the stock and you will see the answer for yourself. There are more hits than misses.

The misses (indicated by the red arrow on the chart) have very distinct characteristic to themselves. Everytime the RSI has breached the level 60 soon after breaching the oversold level of 30 deeply, has lead to a failed rally. Basically, range shift works both ways. If you have RSI racing past 60 after a sluggish move where it held its nose above 30, then that gives a good indication of an impending rally, but the same move after a deep dive below the level of 30 just indicates shortness of breath and a bad (failed) rally.

To add to the above observation, the stock has also successfully made a higher high and a higher low which indicates uptrend. It is currently resting at the kissing point of the 35 and 50EMA. A crossover of the 50EMA above the 35EMA would make me more comfortable with this upmove.

If you look very closely, there has been alot of volume activity near the bottom of the chart just before the higher highs and higher lows came into the picture (literally). This for me is an indication of accumulation by big cats (the guys who knows the whats and whens before everyone else).

The stock also resisted the 100EMA (blue line) is the last rally so naturally moving above this level would be a confirmation of the rally and trend change.

I am expecting a 100% rally in this super cyclical stock post confirmation. Also, a breach of the previous low (59.70) is an exit for me.

As a disclaimer, this isn't a stock recommendation but a mere observation of a great phenomenon unfolding on the chart.
Another disclaimer: I am long on Balrampur Chini.
A warning: Anyone investing in Balrampur Chini based on this article is doing so at their own risk. Please be responsible.

The above observation is purely technical. Anyone with a fundamental insight on Balrampur Chini is invited to share the same, we can put up a collaborated article ( no pay for that :p).
I will myself try to come out with some fundamental insights (only if I get the time, no promises). You can reach me at kchamaria1993@gmail.com for the analysis of other stocks (NSE, NYSE, LSE as long as there is a chart), commodities or currencies, I will try my best to respond.

Until next time, Adios! :D

Footnote : The article was published before rally witnessed in Balrampur Chini today. It close 5% above yesterday's closing.