BATA INDIA (Update): Not convinced with the bullish story

Hello Readers,

In the previous post, I spoke about a lucrative short bet on Bata. The reason was simple, weak evidences on the chart.

Today I reanalysed the stock to try and come up with a revised analysis as the resistance has been breached and the stock is trending upwards. However, upon a close look, the story which is being told by the consortium of price, volume and RSI is not in agreement with what a strong bullish stock should look like. The evidences suggest that the ongoing rally is being supported by a few big players who are influencing the price. The retail participants are majorly selling the stock and we know that without retail participation in buying, no stock can continue its rally.

Please refer to the images below for a detailed analysis. I intend to look into the quarterly data soon to try and pick up on whatever is encouraging this 'spike' buying.

Adios, for now!

BATA INDIA- Walking on slippery ground!

Stock Name: Bata India

Ticker name: BATAINDIA

Current market price: Rs. 910

Outlook: Bearish

Target downside levels: 848, 802

Resistance: 927

Hello Readers!

The hourly chart of Bata India is giving weak signals!

The above picture is pretty much self explanatory. There are 3 specific evidences which indicate that Bata India might take a dip in the upcoming trading sessions. Let's look at them technically.

1) The dark blue line is the 200 EMA on the hourly chart of Bata. It has acted as the resistance zone on several instances as highlighted on the chart with blue circles. In technical analysis, moving averages tend to act as very important support/resistance zones across time frames and are used by trades as entry levels.

2) Another factor supporting our bearish view on Bata India is the fact that the trendline had been breached in the previous correction. This indicates underlying weakness even if the price bounced up again. Broken trendlines should be taken very seriously as all major corrections are first signalled with trendline breaches.

3) RSI - our momentum indicator, has reached the oversold zone of 60 and turned lower without crossing to the 60 to 80 zone which is the bullish zone for up trending stocks. It has been observed that a stock which is in the bear trend, reached an RSI level of almostly 60 in pull backs and upside corrections. Many traders use the RSI level of 60 to enter into fresh shorts in a stock which is displaying other signs of weakness and forming lower lows in price on charts of a higher time frame.

This is all I have on the technical outlook of Bata India's chart. If you have additional insights or even opposing views, please feel free to reach out and we can discuss! Healthy learning!

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After giving a 25% return in 3 weeks, what lies ahead for Balrampur Chini?

Hello readers!

Here’s another follow-up on the analysis of Balrampur Chini’s stock.

After our initial coverage of this stock on 24^th Aug(link here), it has already given a 25% run-up so far which I feels phenomenal.

But let us not forget that run up is just the beginning. The target lies much further ahead.

After two days of strong upside movement, the stock has dipped. Now, market participants will know it is nothing unnatural because profit taking is eminent after suck a sharp one sided move. But I want to emphasize here profit taking is all it is. The upside should continue going forward. The daily chart doesn’t give up much insight into the move as we can see below. It just shows RSI in the +60 zone which is a positive for the price movement. Another evidence of potential trend continuation comes from the volume on the last two days.

 

BALRAMPUR CHINI- daily chart captured on 18th sept, 2018. 

Let’s analyse the hourly chart to look deeper into the price movement.

The hourly chart below is showing good support present at the 35 hour EMA. I believe this acts a good entry point for those who missed the entry at the start of the trend. As Jesse Livermore has thought us we should always enter the bull trend at dips and this my friend is a good dip of 6% before the stock of Balrampur Chini paves its way to its ultimate target.

BALRAMPUR CHINI- Hourly chart captured on 18th Sept, 2018- Prices showing support at the 35EMA. 

That’s all for today. Please do read the original post here. I would love to hear from you. Please share your feedback via comments. You can also reach out to me directly via the contact me form. 

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

You can find my analysis on two other stocks- FRETAIL and REC.  

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.

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.