My long term holdings usually have very strong conviction based on fundamental research. So in those names, since my holding periods are more (1-3 years) as compared to the short to medium term bets, (of a few weeks to few months) I tend to give these positions long ropes. During the stock’s journey in a 2-3 year period, there will be atleast a couple of occasions when the situation will be close to a technical stop loss being triggered. But in these fundamental picks I tend to rely more on the business performance. Exits if at all are based more on fundamental performance. Unless it is trimming these positions based on some sharp run ups where I feel rally is not sustainable and stock price will need to rest/correct for some time. And the capital is needed elsewhere.
Recent example is of Usha Martin where the head and shoulders pattern I highlighted in the technical analysis thread indicated a trim/sell, but since I feel confident about the business prospects of the company, I am okay to bear the temporary pain of seeing stock price go down. Here I had figured out that according to various moving avg supports, 30 WEMA around 290 , 200 dema around 270 and below that, 252 which is 50% retracement level to previous strong rally were the levels to watch. Today stock price took support around the retracement level mentioned above. Today was again a big bar with big volumes day. These kind of findings are usually seen after a strong rally near peak, or after sharp fall near bottom. If this support indeed holds and stock price rallies, today’s bar will qualify as an important daily bar on daily chart. 308-310 is a gap area on daily charts. disc : holding. added more today.
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