Month: October 2018

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Chart Of The Day- Wipro rallies 3.2% after the results

Wipro reported yesterday just after market hours. It beat revenue estimate although missed street’s profit estimate. It rallied 3.2% to strongly retake 50-DMA line with above-average volume today (190% more than average volume). Its been 6 weeks from a good “saucer” it formed on weekly chart. It’s currently trading at 318.2, 5% away from pivot point (334) of the saucer. The relative strength is also impressive at 83. The stock needs to be closely watched for some up-days with above-average volume while it approach and breakout from the pivot. However, one should be wary of EPS strength and market condition and needs to observe them carefully.

Wipro_MarketSmithIndia

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Is it More Important to See Other Stocks in the Industry Group with High Relative Price Strength than a High Industry Group Relative Strength Rating for the Entire Group. Why?

 

The majority of leading stocks are in leading industries. Studies show 37% of a stock’s price movement is directly tied to the performance of its industry group. Another 12% is due to the strength in its overall sector. Therefore, roughly half of a stock’s move is due to the strength of its respective industry. But note that just because the relative strength of the group is on the low side, does not necessarily mean the group is bad. Sometimes, there are only a few true leaders in a group. If the group happens to be large or it is just beginning a move, the group relative strength rating may be skewed to the low side. This is why it’s important to see other stocks in the same group with high Relative Price Strength Ratings rather than a high rating for the entire group itself.

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Chart Of The Day – TVS Motor Rallies 3.7% Post Strong Results

TVS Motor Q2 net profit of Rs 211 crore was in line with estimates. The revenue came 23% higher at Rs 4,993 crore. Today, the stock gained 3.7%, but continues to trade below its 50- and 200-DMA. On upside, the 50-day line which is 3% away from the current price can serve as resistance. The board recommended an interim dividend of Rs 2.10 per share.

TVS Motor_MarketSmithIndia

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How A/D Rating Helps to Identify Price Strength?

At least 70% of all trading in the stock market is done by mutual funds, pension funds and other institutional investors. So any time institutions buy or sell a stock, their activity is manifested by increased trading volume. Volume is the best measure of supply and demand and institutional sponsorship. Therefore, it is a reasonable assumption that any time volume is strong, institutions are involved in the trading in a significant way.