ITC and RCOM show interesting entries (both short) in the MACD+Bollinger Reject Trades. This is a strategy with a number of winning recent trades, and follows a discretionary pattern recognition system where the upper or lower bollinger band is traversed, and moved away while there is a MACD crossover. (Ignore this if you don’t understand technical terms).
ITC seems like it will move towards the 330 mark. There’s a fairly large stop here, but I’d keep it near the last reject (353). There is a strong chance of a bounce off the 20 DMA, so care has to be taken.
RCOM too shows a good sign of breaking down:
RCom’s charts probably triggered a couple days back. However, the move to 20DMA was today. I might go with put options on this, as the lot size is 4,000 and the risk is about Rs. 13, which means a potential loss of Rs. 52,000 per lot (for a future) - not something that fits in well with my strategy parameters.
I had mentioned Sesa Goa too, and strangely that remains open (note: I’m not trading this one):
In my last post I mentioned I would continue with the TataSteel short despite the strategy having given an exit, to see if there is a useful traverse of the lower band. Wrong move there, as the stock recovered quickly. I exited at 287, exiting the option at 7 (which I sold for Rs. 14). The profit shrunk to 13 points from 22, which is a profit of 3% instead of 6%. However, this is off-strategy so it goes into my testing book.
- Oct 1: Tata Steel exits at +6%, TCS call write expires worthless (+3%), Sesa Goa Entry
- Sep 18: Tata Steel and TCS short entries spotted, short fut and a call write, respectively.
- Sep 06: ACC entry spotted at 976, which has exited on Sep 11 around 1048. (+7%)
- Aug 23: BHEL entry spotted at 108, which shows promise to 140, but doesn’t close the gap.Partial exit at 142, looking for 147. (+35% if done right. I didn’t).
- Aug 06: Airtel Short Setup at 326, and exits at 304 (+7%)
- Jul 29: Nifty Short Setup at 5886, and exits around 5542. (+6%)