Since mid of August, I have started doing this as a study so the readers of this blog can learn along with me. I am also giving valuable list of stocks for quick profit. If anyone bought Kiriindus and Trent on the morning of 25th August as they showed up in 24th August list, they would have gotten a profit of 4-6% by evening.
I got inspired for this selection when I once noticed Indigo on daily chart and next day bought its CE at 9 and sold at 18 after few hours. Later traded TNPL, INFIBEAM, DIAMONDYD, JOCIL, BLISSGVS, ATULAUTO, during mid weeks of August and booked about 5% profit in a short time. Every stock may not rise the very next day. But I observed the potential for a rise in the next 10 days, on few stocks over a historical period of five years. Thus I decided to make such list everyday and trade familiar stocks or observe them for building trading watchlists to grow familiarity to trade later.
Today's short term selection list for short term study (2 weeks timeframe). Their performance will be reviewed after 01-Oct.
company symbol today's close price % rise today
ADORWELD 282.7 8.7
DCMSHRIRAM 380.3 4.3
DCW 15.3 8.9
MCDHOLDING 27 9.1
NESCO 585.8 5
SONATSOFTW 336.6 5.2
Same table as a picture.
Commentary:
Today only 6 stocks showed up as the markets pulled back today. Now US markets too are doing the same. This is not like a crash but the sentiment hasn't turned decisively to bullishness. The markets can continue doing this to give second chance to trapped investors to exit, who got trapped at recent high levels before 31-Aug.
As there is no major news other than the US elections that can impact the market badly, there is remnant effect of recent upward momentum. "Remnant Effect" is a term that I have been using for more than a decade to identify the situation where there is some balance left after a major event happened. Here we had a four month rally in Nifty and many stocks. So even after the sentiment changes, this remnant effect gives a second chance to exit. In case a bad news comes, the market would be vulnerable once the remaining bullishness is exhausted. If there is no major bad news, the markets would trade in range like a falling channel, rising channel or as a consolidation phase. These situations are opportunities to trade for short term in some stocks or medium term trades with rotations across long term stocks.
Sonata software showed up on 8-Sep at 318. It's a good move from there. DCM Shriram showed up on 26-Aug at 397. It went down till 330 and bounced off 100 DMA. If one were to think of this for little longer term, one should only try medium term as its long term over years is bad and at best a range trade but of a falling channel type. SIP would only get you out without loss if you patiently waited and sold at the first opportunity of recovery. So every year or basically after every major event (like demonetization, covid-19 lockdowns, IL&FS crisis, now ballooning moratorium crises, etc.) we need to observe which stocks recover and go to new highs. Those are the ones to keep trading for medium term again and again till you will be left banking on second chance to get out because of remnant effect. Once you realize that it was remnant effect that got you out of the stock and didn't make much profit due to its weakness to make new highs again, you need to switch to new set of stocks.
As news plays important role in the market, I need to focus on that. But not all news matters. There is no need to keep checking news all the time like a madman. Like I said before, stocks with investor interest don't care about some low-impact news. See how Shredigcem is quietly rising while other similar stocks that have gained while it fell, are now falling while it is relatively falling less and made good rise yesterday. That is simply profit booking in some stocks and money rotation into stocks that didn't gain much relatively. This view based on money rotation and profit booking combined together, can help do medium term trading.
As I said in earlier posts after noticing Zeelearn in 27-August list, I mentioned about its sector stock NIITTECH. Actually NIITTECH is software and NIITLTD is its pair. NIITLTD is in same sector as ZEELearn. Seeing COFORGE (renamed NIITTECH) chart, I felt it missed the rally relatively for last month, so I bought it at 1936. Now it is nicely showing 16% gain without giving a pullback to buy more. I didn't check any news about it. But IT stocks had some rally in the beginning of July quarter and then took break. Then pharma rallied and now taking break. IT and Pharma are two sectors doing well in this pandemic. So there is no need to check news once they have bullish bias for the sector itself. Chemicals is another sector that recovered well but took break recently. Alkylamines, Balamines are good there. JOCIL is also there which shows in these lists. When it does I can pick up Balamines.
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