Tech: TataSteel and TCS Do Their Magic, SesaGoa Shows Potential Loss

The Technical Setup (Bollinger Reject + MACD) has now worked its magic with Tata Steel, after nearly hitting its stop loss:

The trade was at 289, rolled over into a October future at a Rs. 3 premium (so effectively it’s a short at 292).

For the sake of the system, this trade is complete, at the lower Bollinger band. At 275 (and including a futures rollover last thursday) this trade has yielded about 6%. (in 12 days)

I however see an opportunity in the stock straddling the lower bollinger band at least for a couple days and believe that a more likely target could be 260. So I’ve written a 270 put at Rs. 14, which gives me an upside cushion but maximises further gains to only Rs. 14 (which is another 5%).

The other trade, TCS, was not a direct short, it wasn’t something that fit into the system. However the call was to write the 2000 call at Rs. 29, and that expired worthless:

Again, I don’t like systems that don’t have losing trades. So I’d be very careful trading this system based on just 7 trades that have all worked out.

Here’s another, and I think this is a strategy that might hit a stop very soon, in Sesa Goa:

While I haven’t taken this trade, it seemed interesting at the time. I mentioned it on twitter as well. But I’ll put it in the system - and I’m wondering if this is the trade that loses money!

Note: Big discretionary element. You can bet your right toenail I will not reveal a system that is possible to fully automate.

Past trades on this system:

• 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%)