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Tech: ITC and RCOM Show Short Entries in Strategy. Tata Steel Override Fails.

Deepak Shenoy2 min read
Quick Facts
What is "Tech: ITC and RCOM Show Short Entries in Strategy. Tata Steel Override Fails." about?
What category is this article in?
Stocks
Who wrote this article?
Deepak Shenoy, Capitalmind's research team.
When was this article published?
Published 4 October 2013.
How long does this article take to read?
2 min read
What topics does this article cover?
ITC, RCOM, Technical Analysis

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 Chart

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 Chart

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):

This one is likely to go to the stop loss. A close above 191 would hit the stop loss. However it hasn’t hit it yet, and I expect this to be a fairly large loss-making move (at 191 it would be -7%).

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.

Past Trades:

Tagged:ITCRCOMTechnical Analysis