Following ratings are used to indicate the effectiveness of the trend:
««««« Strong
«««« Good
««« Medium
«« Moderate
« Weak
The effectiveness of the trend is arrived at after taking into account the retracements, momentum indicators, volume indicators and direction indicators.
The ratings are for medium term and these are based on weekly charts.
Development Credit Bank (DCB):
The stock retraced from a low of 35 to a high of 86.40 during wave 1 as indicated in the chart. There was a mild sideways movement in between; it may not be called a wave since the stock never broke the 38.2% retracement and closed below it. 38.2% and 61.8% are the most important fibonacci retracements. That way, we will consider the entire movement from 35 to 86.40 as a single wave. This gives a retracement of 247%. The second wave’s low of 53 falls below 61.8% retracement, but never really closed below 50%. The third wave made a high of 120.55 or about 227% retracement. Currently the 4th wave is in progress. As can be seen from the chart, there is consistent decline in price and volume. This indicates bullishness is intact. Stock is expected to test its previous high of 86.40. 61.8% retracement works out to 78.90 and the stock may bounce back between these two levels. Final target, going by the previous waves retracement history, may be around 160 (assuming the stock makes an exact low of 78.90 during the 4th wave). Actual targets can be estimated after the stock bounces back. This stock is an ideal example of wave theory.
Rating for this stock: Bullish «««««
SICAL LOGISTICS LIMITED:
Yet another stock that has lost 50% from its previous high. From 580 during May 2006 it fell to a low of 144.05 in March 2007. The stock has broken its resistance at 256.15. The next resistance level is around 301.
Watch the triangle breakout in the chart. It is a highly bullish sign. Though the stock may be in overbought condition due to the nearly 100% retracement in the first wave, it is bullish for the medium term. Any decline in this stock could be only an opportunity to enter. 61.8% retracement works out to 414, which could be the medium term target.
Rating for the stock: Bullish ««««
PSL Limited :
The stock, after making a high of 312 in January 2006 fell to a low of 158 in September 2006. It was in consolidation since then. The strong resistance around 250 was broken recently and it closed above it on a weekly basis. The momentum, direction and volume indicators favour further uptrend. The stock is likely to test its previous high of 312 shortly.
But the lack of volumes during the uptrend is a minor concern. However, if it manages to close above 312 on a weekly basis we can expect even further upward movement.
Rating for the stock: Bullish «««
Stocks that are bearish / sideways:
| Stock | Status | Rating |
| ACC | BEARISH | «««« |
| BOMBAY DYEING | BEARISH | ««« |
| CIPLA | BEARISH | «« |
| CAMBRIDGE | SIDEWAYS | ««««« |
| ENGINEERS INDIA | SIDEWAYS | ««« |
| TAMIL NADU PETRO | SIDEWAYS | ««« |