DAILY CALLS (4th july; 2011)
Intraday call on HINDALCO
The stock on the whole has picked up an uptrend with the upward sloping trading channel continuing in the stock from 8th July ’2008 onwards. Prior patterns in the charts have been clearly advocating that whenever it has tried to break off the upward resistance level of the stock, the formation of the black candle to close within the range suggests the minor retracement in the prices of the stock to take the first support from the 20DMA .however, the long term moving averages have not been showing any signs of retracement and moreover, the stock after taking the higher high has been falling back on to take the support from 20DMA from quite a few sessions starting from 11th may;2011 onwards. Currently the stock has attempted to break off the upward trading range to the upside, but the fall back of prices to close within the vicinities of the trading range suggests the next possible attempt of the stock to take the support from the 20DMA.
Moreover, the Fibonacci time ranges are clearly suggesting that once the stock loses the level of rs.336.50 to the downside, the retracement shall be confirmed and the next attempted support levels shall coerce it to drop off at the levels of rs.321-324, which is the next support levels imparted by the Fibonacci time ranges in the coming week ending 8th July; 2011.
Indicators are also suggesting that the downside movement is strong in the stock with everyone sharply falling downside in an attempt to lose their hold off from their overbought zones. The average volatility in the stock has been coming at around Rs.5, hence it is feasible to buy put options in the stock with a strike prices of Rs.321-322 for about a week or so.
It is recommended to go short in the stock with an entry and exit price of Rs.336.50 to 332 with a stop loss of Rs.339.
