Intraday trading techniques followed with stock selection and trading strategy adopted that helped to win Bull’s Eye stock trading show on CNBC TV18.
Nifty had been all over the place during the week from 13th February 2017 to 17th February 2017 during which the trading show was held. The most important thing that I personally followed is to understand the direction of major index before stock selection on each day. This helped me to gauge out of 4 stocks to pick daily how many we need to have on the buy or sell side.
Notional amount of 400,000 was given that has to be spread across 4 different stocks on daily basis.
13th February trades: During the week Nifty had been constantly struggling to cross above the important resistance level of 8810 – 8825. We mentioned the importance of these levels even in our daily Equity research reports. Also a peculiar thing was Nifty was opening near the highs and later giving away the gains from the same level. This behavior made me keep 2 stocks on the short side and 2 stocks on the long side as there was no negative confirmation but prices were also struggling at higher levels. This was contrary to majority who were bullish. Stock tips – Buy HCL Tech, United Spirits, Sell Hindustan zinc, Jet airways.
14th February trades: By 13th broader markets confirmed the deterioration in the overall breadth and so it made more sense to have 3 stocks on the sell side and just one on the buy side again because there was no negative close below previous low on Nifty to confirm all shorts. So it made sense to have one on buy side in case the resistance level breaks. Sector outlook was also very important for stock selection. Stock tips – Buy Cairn India, Sell Apollo Tyres, Jet airways, Union Bank.
15th February trades: On 14th as well Nifty reversed from 8820 levels i.e. opened near the day’s high and selling pressures intensified in broader markets with overall breadth deteriorating. So it now became prudent to go shorts on Midcap or smallcap stocks as they are high beta and long on a stable stock with very small stop to keep the profits intact on the shorts. Nifty showed strong selloff from 8807 to 8713 levels. Stock tips – Buy Cairn, Sell DLF, Apollo Tyre, KSCL (DLF and KSCL gave best returns in shortest time as Midcap sector was capitulating)
16th February trades: Sharp selloff on 15th February with close below the previous day and break of 8715 increased the odds that the down move was getting bigger. However, we were yet to see close below 8715 as this was channel support on Nifty as well. So I still preferred keeping one stock on buy side. The stock - CESC on buy side was picked that was outperforming and did not move lower with the broader markets and of course having good individual chart pattern. Stock tips on 16th Feb – Buy CESC, Sell CONCOR, Bank of India, Crompton Greaves.
17th February trades: On 16th February Nifty reversed protecting the low of previous day and also protected 8715 support that was channel trendline. The reversal was across the board and the pattern looked very similar to that seen during the earlier wave x formation. You can read about FractalNature of markets in my video update. On basis of this Fractal Nature and movement there was high chances that Nifty will turn back positive and break 8820 level on upside. We mentioned about this in our daily equity research report – The Financial Waves short term update on 17th Feb morning itself. Stock tips on 17th – Buy CESC, Bharat Financials (earlier SKS Micro), Marico and Apollo Hospitals.
The above strategy clearly highlights the fact that knowing the direction of major index is extremely important even when individual stocks have their own technical picture. These stocks lose their identity if the major undercurrent or index tone is strongly trending in one direction. On 17th February index indeed break the level of 8820 which was protected for so long and helped us to gain even on 17th February.
Evaluating individual stock technical charts are also important but identifying the number of stocks to be on the buy or sell side on each day based on overall market tone was the key to trading success during the week.
For reference anyone wants to read about strategies followed in May 2016 can refer the following link: Rules followed during ET Now game show where I won with substantial margin can be found in this link – Rules followed to win ET Now show by Huge margin
Another Bull’s eye trading strategy followed in September 2016 – Trading strategy to win September 2016
The above is just to share across my personal experience during these shows. There are instances when a few strategies do not work and we need to change it as per market dynamics. One such instance was buying outperforming stocks near new highs did not result into desired outcome as the overall market was losing momentum. So I constantly thrive to change the strategy based on market dynamics. And yes the major driving factor for all of the above strategies were – Elliott wave, Neo wave, Channels, Bar techniques and Time cycles to understand the overall tone.
I find it extremely important to share across trading strategy that helped me in stock selection and come out as winner in this game of probability. Happy Trading!
Learn about the various strategies in detail along with Elliott wave, Neo wave and Time cycles at the two days workshop on 18th and 19th March 2017. Learn more