On twitter I've been posting stock calls/charts since sometime now and I'd post a sell call on HCL Tech when it was around 1080 on 24th September after noticing clear negative divergence. Here's the chart I posted on Twitter @urf_prince
Since that stock price went down till 1045 September futures and I booked my shorts at 1048 on Thursday 26th September, with a view/plan of shorting October at higher price again preferably around 1080.
I got a chance to sell/short it higher again very next day on Friday and I'd went short @ 1079.60 in futures and I'm still holding my shorts with a stop loss of 1095 by closing. So why is my conviction on the sell side? Let my charts answer it:
As you see above HCL Tech weekly Charts also has negative divergence between price and RSI. The RSI is not just in the overbought territory, but it has flattened. Many would argue that this weekly divergence is not valid and too some extent I would agree as well. But hey, you cannot argue the overbought situation in weekly as well as on monthly charts where RSI is currently at 81.90 and that would make any price rise unsustainable going forward in the near term.
Lets forget the RSI and divergence, lets look at simple line charts and understand what it is doing:
As of now HCL Tech has been maintaining it rising trend line. To break it next week, all it needs to do is close below 1060 with above average volumes. If it does so, it will trigger lower end targets at 1025-30. Followed by support at 1002-1015. If breaks below 1000, then 960-970 will be tested on the lower side.
On the higher side if HCL Tech triggers stop loss @ 1095, then I would look to re-short it IF not above 1120, Stop Loss 1125. The negative divergence on the daily charts will get negated on IF HCL Tech Fut closes above 1125, till then sell on all rallies!
Apart from the charts one reason why I am bearish on HCL Tech for the short term is also that EVERYONE in the print and electronic media is bullish on the IT stock posting higher targets. Here are some of the latest posts/links I could find:
http://www.financialexpress.com/news/outperform-on-hcl-tech-shares-target-price-rs-1300-macquarie/1175250
http://economictimes.indiatimes.com/markets/stocks/views/recommendations/buy-hcl-technologies-ltd-with-a-target-of-rs-1125-ashwani-gujral/articleshow/23026928.cms
I can be proven wrong on this, but that's how the market behaves. But if the trades goes well, I know I am going to make very good money over this.
Happy and Safe Trading!!
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| HCL Tech daily Charts had clear negative divergence between price and RSI |
I got a chance to sell/short it higher again very next day on Friday and I'd went short @ 1079.60 in futures and I'm still holding my shorts with a stop loss of 1095 by closing. So why is my conviction on the sell side? Let my charts answer it:
 |
| HCL Tech Weekly Charts negative divergence between price and RSI |
Lets forget the RSI and divergence, lets look at simple line charts and understand what it is doing:
 | ||
| HCL Tech Futures Daily Line Charts which is basically closing to closing: Good for positional trades |
As of now HCL Tech has been maintaining it rising trend line. To break it next week, all it needs to do is close below 1060 with above average volumes. If it does so, it will trigger lower end targets at 1025-30. Followed by support at 1002-1015. If breaks below 1000, then 960-970 will be tested on the lower side.
On the higher side if HCL Tech triggers stop loss @ 1095, then I would look to re-short it IF not above 1120, Stop Loss 1125. The negative divergence on the daily charts will get negated on IF HCL Tech Fut closes above 1125, till then sell on all rallies!
Apart from the charts one reason why I am bearish on HCL Tech for the short term is also that EVERYONE in the print and electronic media is bullish on the IT stock posting higher targets. Here are some of the latest posts/links I could find:
http://www.financialexpress.com/news/outperform-on-hcl-tech-shares-target-price-rs-1300-macquarie/1175250
http://economictimes.indiatimes.com/markets/stocks/views/recommendations/buy-hcl-technologies-ltd-with-a-target-of-rs-1125-ashwani-gujral/articleshow/23026928.cms
I can be proven wrong on this, but that's how the market behaves. But if the trades goes well, I know I am going to make very good money over this.
Happy and Safe Trading!!
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