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  #21 (permalink)  
Old 02-05-2009, 12:54 PM
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wow nice find rsi, o.i rising against drop in volume, classic set up, surely short positions building up IMHO
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  #22 (permalink)  
Old 02-05-2009, 10:22 PM
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Originally Posted by rsi View Post
Is the "smart money" moving out of Sterlite longs?


Hi Iyer

It would have been mice if you had stated the reasons for such a doubt...

Let us take a look at the hourly chart.. (Chart Attached)

During the down move on the 28th the volume was below average. There two high volume bars. These bars closed near the middle of the bar. In VSA these bars would be termed as "Transfer of ownership bars". On hindsight , these bars happened near the bottom of that move and it would be safe to assume that that the smart money was buying on these bars. What followed on the 29th is clearly the stock is being marked up. We have three bars which are classical "Effort to move Up" bars with increasing volume with the last one on ultra high volume.

If we look at the chart from a border view we can see symmetrical triangles pattern which is a continuation pattern. The volume pattern also suuports the symmetrical Triangles pattern. Now 415 (420 would be more appropriate) assumes greater significance and also the bottom trend line.

Alex, looking at hourly charts it would mean increasing Volume with increasing OI and of course price... Will that not change the perspective..

It would be interesting to watch how the stock pans out in the coming week.
Will it be a breakout from the symmetrical triangles or a drop back to the 380 - 390 levels which will be the bottom trend line (of symmetrical triangles).

More views welcome...

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Old 03-05-2009, 06:44 AM
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Karthik,

Infact I have already prepared a lengthy post as to why I am having such a doubt. But since I have been waiting to see Monday's action and possibly Tuesday's action before making that post. I wanted to see break of the trendline and taking out the pivot low with a close below it. Anyway since you wanted to know the reasons on which I am having such doubt, here it is. See the next post

Last edited by rsi; 03-05-2009 at 12:13 PM.
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Old 03-05-2009, 06:46 AM
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See the daily chart first. Chart updated as on 29/04/2009. Ignore those dotted lines appearing in daily chart.

[IMG][/IMG]
As you can see, Sterlite has been on a nice upmove from Rs. 215/- to Rs. 430/-. There it encountered resistance and fell back to Rs. 361/-. Then it again started to move up. But this time it could moveup only to Rs. 419/-, which happened on 27/04/2009 (third candle from right edge). You will also notice that the volume was less on last peak, i.e. at Rs. 419/- when compared to earlier peak at Rs. 430/-. On further close inspection, you will also notice that the volume in the entire upmove from Rs. 360/- to Rs. 419/- was very less. All of it indicating a possibility of lack of interest from the smart money to the upside.

28/04/2009 was the date for announcing the annual results of Sterlite for the year 2008 – 09. On that day it also announced the quarterly results for the period beginning from 01/01/2009 and ending on 31/03/2009.
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  #25 (permalink)  
Old 03-05-2009, 06:51 AM
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Now let us shift our attention to the action on lesser time frame, i.e. to 5 minute intraday charts so as to see what happened on 28/04/2009 and on 29/04/2009. Remember, on daily charts we already have seen signs of lack of interest to the upside. That opened the possibility of either a consolidating move or a move to the downside. We do not know which one will happen next. For the time being, just pretend that you have not seen the daily chart updated with the candles of 28/04/2009 and 29/04/2009, i.e. last two candles in the daily chart.

Here is the intraday 5 minute chart showing what happened on 28/04/2009 and on 29/04/2009. Ignore all lines appearing on intraday charts.



On 27/04/2009, the stock made attempt twice to clear the 420 level and failed. However, it closed very near to the high. But see how the stock opened on the next day, i.e. on 28/04/2009, the results day. It opened with a gap to the downside and what happened next? Throughout the day, it was moving down very aggressively. Results were being announced by the charts well in advance. As expected, results of Sterlite (both annual as well as fourth quarter) were poor. Sales were down, net profits were down. There was nothing to set River Ganges on fire.

Now look at the daily chart and see how the daily candle on 28/04/2009 looks in daily chart. It had a lower high. It has large range and at one stroke it has taken out the low of earlier two days and closed below the low of earlier two days. Also, a clear lower top has been formed. Now natural expectation would be continuation of this down move and to take out the earlier pivot low of Rs. 361/- and also to break the trendline and close below it to complete 1-2-3 top formation.

Remember with this background, we are going for the trade on 29/04/2009 expecting another day of downmove.

What happened on 29/04/2009? I have attached the same 5 minute intraday chart showing the action of 28/04/2009 and 29/04/2009 alone. See the chart



Stock opened around Rs. 391/- started to moveup, found resistance around Rs. 396/- and as expected, started to move down. Again it moved down quite aggressively. But look what happened. It just broke the earlier day’s low and instead of going down, it reversed!!!. In the context of 5 minute intraday chart for two days, i.e. 28/04/2009 and 29/04/2009, you can see a selling climax on the afternoon of 28/04/2009 just before 3.00 P. M. and retest of that selling climax on the morning of 29/04/2009.

But was this sufficient to buy? Remember the background information of poor results, formation of lower top etc. in the daily chart, i.e. sign of weakness in the higher timeframe chart. Aggressive intraday traders might have brought it when it moved above the first pivot, i.e. above Rs. 384/-. Some other cautious intraday players might have brought it above the high of next pivot low candle i.e. around Rs. 389/- and some might have brought it above the opening range high, i.e. above Rs. 396/-. But would a daily time frame swing trader have brought it? I mean a longer time frame trader. That is the question. Answer to this question will provide the reasons for this “unexpected” upmove from the lows on 29/04/2009.

The question to be asked in the first place is why the stock is moving up so aggressively when it is “expected” to move down or atleast to move sideways?

We get the answer at the end of the day. Take a look at two day 5 minute intraday chart again, i.e. second chart in this post. Massive volume in between Rs. 408/- to Rs. 414/- level and it effectively capped any further upmove. Is it buying or selling by smart money? Looking from the earlier background information, it is selling. That gives the answer as to why stock moved up from Rs. 361/- low on 29/04/2009 to Rs. 414/- high inspite of all background weakness. Stock was marked up to sell to the lesser informed buyers. Otherwise there is no justification for low volume upmove from the day’s low of Rs. 361/- to Rs. 410/- level. If the smart money wanted to buy, it would have bought at lower level and not at higher level. In this context compare the volume which occurred after 3.00 P. M. on 29/04/2009 with that of the selling climax volume on 28/04/2009 and volume on retest on 29/04/2009 morning. Smart money will try to accumulate at lower level and not at higher level.

The final piece in this entire puzzle was the delivery data, which came after the closure of the market. Now again see the daily chart. Look at the massive jump in open interest on the last day. You can clearly see that all that selling that has taken place on 29/04/2009 was delivery based selling.

This is how stock price was marked up for the smart money to distribute its holding (brought at lower price) at higher price and for profit and to get out of the stock. Once this distribution is complete (and once shorts are built up, if necessary), this artificial support will be withdrawn and it will move down in the absence of any support from smart money. Sometimes it may be marked down also, so that shorts generate huge profit. Those uninformed buyers who brought at higher levels will be left holding an “unwanted baby”.

Last edited by rsi; 03-05-2009 at 10:30 AM.
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  #26 (permalink)  
Old 05-05-2009, 12:03 AM
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Originally Posted by karthikmarar View Post
Hi Iyer

It would be interesting to watch how the stock pans out in the coming week.
Will it be a breakout from the symmetrical triangles or a drop back to the 380 - 390 levels which will be the bottom trend line (of symmetrical triangles).

So the stock broke out of the symmetrical Triangle.

Enclosing hourly chart. Look at the stock rocketing up on lower volumes... a parabolic move...

I can almost see the novice traders rushing in with their hard earned money..

Does look like we are in the climatic moves .....


Last edited by karthikmarar; 05-05-2009 at 12:05 AM.
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Old 05-05-2009, 12:07 AM
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mmm. The smart money getting ready... what do you think..

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Old 05-05-2009, 12:27 AM
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3850.... karthik.... just few more,,,
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Old 06-05-2009, 02:52 PM
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Originally Posted by karthikmarar View Post
mmm. The smart money getting ready... what do you think..


One thing we must always remember is that we are not "smart money". So unless we get confirmation as to what smart money has done, it would be premature to act on our part. True, this costs us. We will miss a part of the move. But that is the cost of insurance.

That is why I said in my earlier posts that I am having doubt that smart money is moving out of sterlite longs and that I want to see confirmation of it.

Yes move appears to be climactic. Herd is feeling left out and hence rushing in. Let us wait till we get confirmation.
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Old 07-05-2009, 02:14 AM
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Update on STER Hourly...chart speaks the rest

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