8/5/2015 12:00:00 AM
Hanging Man... A rare pattern visible on daily chart of JMTAuto....
A considerably larger auto component manufacturer in the eastern region...JMT Auto Ltd, is involved in the manufacturing of auto parts specifically for engines, gears, axles etc. had a shown a very good rally in the stock market since last few days.
The stock was trading between 50-55 Rs. between 1st and 9th July, 2015. The breakout was recorded on the daily chart of this counter on 10th July, where it was opened at 55.80 and remain there through out the day. It closed on the day at 55.85 Rs. in NSE.
Since then, the counter had never take rest and continuously rising with great pace. Say, it was almost in the buyer circuit from 14th July. The day was closed on 14th July at 61.5 Rs. There was no seller in the market on that day. Since then, the stock didn't saw any selling activity in the markets. The rally continued till 4th of August, 2015 and the closing price was 127.35. Clearly doubling the investment in the counter in just less then a month time.
The investor who has invested at the earlier consolidation period had got full reward as the amount invested has given excellent return in the time period of just 2 months. The stock was trading at 29 Rs on 24th June, 2015. A handsome return of 400% has been registered on the charts of JMTAuto on NSE.
But, there is a twist in the story. The stock registered a red hammer at top of the daily charts of JMTAuto Ltd. The hammer has a very long tail and a clear body with open = high value registered on the charts.
This red hammer recorded on the chart after following a very long trend of doji candles. The buyer circuits give shape of a doji candle on the charts. This a clear indication of a very strong bearish pattern - Hanging Man. The significance of this candle pattern is that investors or traders gone long on this counter have to come out and clear their position in this counter, at least for the time being.
There are not too many examples of this pattern and that's why we called it a rare pattern. It was appeared clearly on the charts of "Wipro" very long before(data not available with us). After this, the pattern hardly appeared on the charts of any scrip, except peni stocks.
There are chances of stock taking a deep dive in the southward direction.
Investors are advised to take optimum care while trading or investing in this counter at the current levels and if possible, if considerable profit already booked in your account for this counter, it is a better strategy to book profit in this counter for a time being. Later, once the stock price get stabilized, investor can reenter in the counter...
If the stock didn't allow to exit to the investors(seller circuit), then it will be more disastrous for his/her portfolio.
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