Resuming Posting After a Long Time

I had lost touch with this blog for a long time since August. The breakdown of SELMCL coincided with lot of other things. The worst of recession has happened after that time.

September and October were the two bloody months that the world markets all together have ever witnessed. Lot of unwanted but inevitable things happened during that time. And that has set the tone or upper limit for the markets which haven’t crossed till now. I don’t think they will ever cross that limit.

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I had become very busy with my daily work and couldn’t concentrate on continuing this blog. Well, there was no special incentive in maintaining this blog. It was a matter of expressing my thoughts about stock trading on a day-to-day basis. But because of overpressure in other works, I had to put a pause to it. I didn’t know how long at that time.

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Things were only getting worse and I had stopped my trading. I realized that I couldn’t trade the way I used to before. A loss was always unbearable for me and I always cut it when it is small even though painful. I never take diversification. That is a myth. It is like taking alcohol and driving a car. Feels good and safe till the accident happens.

I have learned the importance of organizing information that I had been learning with my trading. I will plan to post them over time. I have written down rules that must be strictly followed while trading. There are lots of ways to find stocks or filter them, for day trading, for trading in the morning or evening and also for short term trading. Long term trading is a phenomenon that doesn’t exist now. I don’t have any hopes for it in the future.

Coming to the present day, I noticed that my broker, Indiabulls, regularly sends an article to give a “morning brief”. This is cool to get some fresh information early in the morning. Indiabulls seems to be doing some best job for their clients.

Today’s news are not breaking news. But there is an interesting news. DLF has cut back its residential project prices by Rs. 13 Lakh in Chennai. This shows that there is a good fall in property prices in popular cities. We need to wait for more action that can spread this to all the parts of a city like the area where I live. Just be patient. That is surely going to happen.

Let us look at the chart for Nifty.

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There is a suggestion that there could be an unexpected uptrend after all the dancing that happened since November. The white candlestick after a “dragonfly doji” day. This is a classic followup. But still the moving average above it shows the resistance. We can safely assume that it will breakdown surely but gradually once it crosses below the magical 2500 mark. It will because the hell is going to break lose like anything we have never seen before. Don’t say not again.

Putting it aside because it is the long term trend, we can see that this time is a pause from the long term trend. These are the best days to start any venture, shift jobs, look for a new office or anything. I think this is the optimal chance. It may not come again anytime soon.

From the general statistics that I track, I checked only the stocks making 52 week high. I found one stock – “Cambridge Solutions”. It is in information technology sector. This is one of those rare, unpopular stocks like the SELMCL. But its volume is lot lesser. Putting the chart below. I think this can be the next good bet.

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This looks like a nice trend. It is bouncing above its moving average. But my broker may not allow me to buy the stock. There is some restriction in Indiabulls. We can only trade heavily traded or high volume stocks. That sucks, Indiabulls being the best in class brokerage service for trading on National Stock Exchange.

There may be more next good bets lurking in the shadows. It needs some effort to check the older statistics and filter them with various criteria. I will post them as I find them.

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The Fate of SELMCL from here on

The stock has not yet shown signs of any recovery as it hasn’t stopped making new lows. Why I am concentrating more on this stock is because it is an exceptional stock compared to any other stock.

Its long term trend is temporarily changed to down trend. Presently it if forming lower lows and lower highs indicating the pain is not yet over.

Just take a look at this chart. It is clear that it is facing pressure from a distressed seller. The high volumes coupled with its ability to make lower highs and lower lows prove that point.

So I expect it to break down further in the coming days/weeks, if not on Monday. We can clearly see that it had traded for a long time in the part (April) around 400 and that served the purpose of being a stop for the last three days as it is still hovering around that level.

In the same way I expect it to retrace back to 500 after many weeks as it traded around that value for many days in June and July and it had been resistance in May. That implies clearly that it can become a resistance in the future also.

My next bet on this stock is to enter after it makes a quick recovery from the lowest low and consolidates for few days. I will then post here at what price to enter and exit.

Update: I watched this stock once in few years and always felt elated seeing it at lower and lower prices. Though it did bounces occasionally once in a few years, they didn't match those of the gainers in each bull market. As of today, 11 Dec 2019, SELMCL share price came down to 0.90. What a fall from 500 levels a decade ago. With GDR share price dilution happened which was one reason for the fall a decade ago. Since it has not stopped falling, neither is it getting delisted from the exchanges. There are many such stocks in the market which keep going lower and lower. I have seen MVL, Antarctica, MTEDUCARE, etc. Recently DHFL, Yes Bank are following the suit. Strictly avoid touching these stocks. It is ok to watch them for fun only.

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Breakdown of SELMCL

Let us take a look at how SELMCL did after the last post.

After two days of high percentage gains because of breakout from trend, it started showing retracement. As with any stock making new highs, the end will always involve all time high and a close below the previous day’s close. That too it should have a black candlestick. It normally behaved after that by opening high and closing down by the end of the day. But worst part came after an upmove day where it gained ten percent on Aug 7.

It was clear that it is consolidating but the next two days were not as expect. Normally its range would have been diminished and would have entered into a range trading pattern with different high and low values. But from August 8 onwards it was falling terribly and had two lower circuit days of 20% with huge volumes ever. Lot of trading activity happened in this stock. That clearly told its long term trend has changed in just two days. That is disastrous for any investor.

Though it happened as a sudden surprise I figured out the reason after these two large black candlesticks. It was affected by the Russia-Georgia war. Not that it is directly affected. But because it is just following the Russian markets ever since it was listed on bourses.

It is a garment export company with major markets in Russia and Middle East. This is one stock that was not at all affected by the mayhem in the general market rocked by US economic crisis. The reason was clear. Its markets are emerging and are not dependent on the US economy but rather US and EU are now heavily dependent on these countries. It is all to do with their oil. India is not like that. Both for oil and for export markets it is heavily dependent on US and EU. SELMCL was an exception this. That is why even though it listed in August 2007 within a year it made a low of 77 and high of 735.

There after it behaved as Russian markets are behaving everyday. We can confidently say that in the long term it is still good no matter what happens with Indian economy in general.

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SELMCL broke through the roof!

I didn’t notice when it happened. Just one week back I was looking at this stock trading around 515. I had noticed that it was bouncing repeatedly from 490-500. I felt this could be strong support. After leaving home on Friday, I got cold and fever. I couldn’t track it/any stock in the next week. But I felt that the support can be used as stop loss and buy the stock at 510-525 without fear.

Before I could recover and do anything the stock had its day on Wednesday and Thursday of this week. It gained from 520 to 675 in just a week. In two days the stock went up nearly by 30%. As I used to say there will always be a 25-30% move in stocks making new highs in a bull market, it has just proved that. Sad part of it is that I tracked it for many days and at the right time I had missed it. Nothing is worse than this.

Let me show the chart. The stock broke out with terrific volumes in just two days.

It rose from 510 to 675 in just two days. And if you ask me how I could have known to take advantage of this, just look at the candlesticks it was making everyday.

A white candlestick always indicates bullishness and we should be alerted by seeing it for preparing to buy. A black candlestick serves the opposite purpose. But that should be used after the stock made its upmove.

Here the stock made its new 52-week high of 631 on July 10. Thereafter it started consolidating with minor volumes. Everyday there was a black candlestick formation. Clearly it repeatedly bounced whenever it went below 500.

Anyway this game is over for now. We cannot expect another good move till 3-4 weeks. Till then just watch for the bouncing point and just enter a little above that price. Always remember stoploss if it goes through the support instead of bouncing. We can find such opportunities every quarter. A 25-30% gain can really be made. That doesn’t mean we should gamble without a stop loss. It should never be done. Once it falls through the supports just get rid of the bleeding stock.

Same thing can be expected with RNRL and ArevaT&D, the upcoming players. RNRL is a speculative play because UPA govt has won with SP’s support who are friendly to Anil Ambani. We can notice this speculation already by looking at the volumes of RNRL. It was just dead before with 20m average volume. Now it became live with 50m volumes and more. It rose from 60 to 100 in few weeks. Now it can be expected to reach 150 in the coming months easily as it got lot of attention. Any dip can be considered as opportunity to buy. But always look for supports.

ArevaT&D is consolidating now and bouncing from 1600. These are good stocks in the sense that even if the markets go down because of bearish outlook these will get support because of lower prices. Once market in general bounces, they will make up moves.

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