In this down move participation has been spreading slowly and steadily. In this kind of market one should be ready with proper trading strategy. LT has showed sharp down move in Fridays trading session post the declaration of result. Now many will think that due to below expected results there was sharp fall in prices. However were you able to capture the down move?

The Financial Waves Short Term Update covers Nifty and 3 stocks where short term trading opportunity exist. See below the chart of LT we have taken from the research report:

LT 60 mins chart: (Anticipated in the morning of 21st October 2015)  
 LT 60 mins chart: (Happened on 30th October 2015)
(Part of research published in the morning of 21st October 2015)

Wave analysis:

Capital Goods stocks are showing weakness. Majority of stocks like BHEL, Havells, Siemens has continued to move higher but momentum on upside is drying as the time is going. This is providing the early indication that distribution might be ongoing in these stocks given the momentum less up move from last few days. We have picked up LT which has retraced the prior down move and now looks to be at the matured stage of up move.

The downfall from 1888 to 1412 witnessed from July to September 2015 has retraced the last leg of down move in faster time and thereby confirmed that medium term trend has reversed on downside. As per wave perspective, prices have completed intermediate  wave a at 1412  and from the start of September 2015 intermediate wave b is ongoing which looks to be at matured stage. Moreover prices are near the 200 days Exponential moving average from where we have seen reversal on downside in the past. Hence one should be cautious in L&T now as it has arrived at inflexion point.

As shown in 60 mins chart, ROC which gauges the momentum of the given period of time has been showing negative divergence. This is suggesting that upside momentum has been reducing. Now, sharp fall below 1535 will indicate that intermediate wave b completed in form of Zigzag correction pattern and intermediate wave c has started on downside.

In short, move below 1535 is required to confirm negativity and then 1410 can be expected which is the first conservative target.

Happened: LT moved in line with our expectation and even during the result, prices respected our objectivity and touched our first conservative target of 1410 on 30th October 2015 when Company declared results! Isn’t it surprising?

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