By Vishal Dalvi, CMT
1/ RAMCOCEM Yearly Chart
2/ RAMCOCEM Monthly Chart
3/ RAMCOCEM Weekly Chart
4/ RAMCOCEM Futures Weekly Chart
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RAMCOCEM Yearly Chart
In the Long run stocks prices are slaves of Earnings and history has enough evidence to show that Fundamental Investing has been a profitable long-term strategy for wealth creation. But one can successfully invest for the long-term using Technical Analysis too.
There are several strategies to finding stocks for investing using Technical Analysis; I am going to discuss one of the strategies I use. Let’s look at the set up using RAMCOCEM.
- Long Term Uptrend should be Intact
- Minimal/Negative returns in recent years signaling Consolidation in a broad range
- Rise in Delivery Volumes
- Rise in Cumulative Open Interest ( If Future contract available)
Past performance is not indicative of future results
Long Term uptrend is intact for the stock. Prices continue to rise in the up trending Channel and yearly lows for last few bars have been taking exact support at the rising uptrend line.
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RAMCOCEM Monthly Chart
Past performance is not indicative of future results
Elliott Wave Principle (EWP) shows that stock may have finished its corrective phase in the form of a Running Triangle around 700. Instead of putting a wave count to every small move, one can simply look at whether the up moves are impulsive (Internally 5 waves) and fall/corrections are corrective (overlapping) in nature. As long as that structure hold the long term uptrend should continue. As long as above 700 levels, wave 3 should take prices to a new high. Fall below 700 may negate this wave count.
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RAMCOCEM Weekly Chart
Past performance is not indicative of future results
Huge Delivery Volumes are strong leading indicators to a potential large move in the stock. It’s a sign of smart money entering the stock. What is important is that the delivery volume is a high cluster for months and not just for few trading sessions. A good way of checking that is to plot a 50 period moving average on Volumes and the average line should rise at least two times of its past historical mean.
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RAMCOCEM Futures Weekly Chart
Past performance is not indicative of future results
Since a Future contract is also traded for this stock, Cumulative Open Interest can give significant insight into the stock. Open interest build up is at historical high levels and have spiked recently to more than double than its historical averages. This is a strong precursor to a big move coming in the stock as it shows huge interest and participation in the stock. A warning note is that Open interest build up by itself cannot gives any clues to the direction in which the stock may move, and it has to be seen along with Price action confirmation.
The Weekly Chart also shows an Inverse Head and Shoulder pattern and a break above 890 levels, should trigger start of a multiyear run up in the stock. Long Term breakout is above 1050 level. 700 remains a critical Risk management level.
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Originally posted 4th September 2024
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