LIC Housing Finance: Amazing down move captured using Channel, Wave, Moving average

LIC Housing Finance showed sharp selloff in lines with other Housing Finance companies. But the trend had been negative for many months and we were expecting prices to move lower weeks earlier. See below detailed research given on 11^th September 2018 well before the crash across the space.

The down move on Friday was contributed to the default by IL&FS which in turn resulted in DSP Mutual Fund selling their holdings in DHFL bonds at steep discount. This created panic among the market participants who perceived the entire Housing Finance space is in big trouble. The entire Housing Finance Sector has been under pressure due to this event. We successfully anticipated  fall in LIC Housing Finance and the stock cracked. One should avoid catching low in such weak stocks unless we see a break of important resistance levels on the upside.

Below is the chart published in our daily report the “The Financial Waves STU” on 11^th September 2018 where we able to capture the move from 490 levels

LIC Housing Finance 60 mins chart: Anticipated on 11^th September 2018

Happened:

Wave analysis: Following was published on 11^th September 2018

LIC Housing Finance post forming a top in June Month has shown a weak movement since then with no attempt of positive reversal. In the previous session the stock closed nearly 3.50% negative and formed a low of 482 levels in the final hour of the session.

We have shown ADX indicator on daily chart that displays strength of the trend and also confirms the direction with the help of +DI (Directional Indicator) and -DI. If +DI crosses above the –DI it indicates that the direction of the trend is positive. The +DMI (green) is moving below –DMI (red) suggesting negative move. If we observe well whenever the distance among these two lines increases we see continuous downwards movement and when they are nearing convergence we see range bound movement. Here we are witnessing the former scenario, hence further downmove is expected.

As shown in the hourly chart, prices are currently moving in wave iii of (c). Also, the EMA and channel are working very well and one can make use of the channel support and resistance for taking short-term positions. Any pullback can be used as a shorting opportunity…

Further in today’s morning research report we again covered this stock mentioning the following: As shown on hourly chart, prices completed wave iii near 396 levels and currently wave iv is ongoing on upside. We have not seen any signs of positive retracement since the top made near 585 levels on 24 August indicating signs of concern. Any pull back near 460 levels can be used as shorting opportunity for a move towards 420 or lower levels.

Happened: Irrespective of the event we have been bearish on the stock and even today it moved as expected. The pullback on upside was temporary and prices breached below 420 levels as well. This shows the power of Elliott Wave.

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