Despite Nifty witnessing downtrend there are certain stocks that have stayed undaunted by index’s move and is managing to hold its important supports. But when the index witnesses such move investors tend to panic and exit their investments without any appropriate strategy to avoid incurring any losses. Such a move might result into dropping out of stocks which could give amazing returns over long term.
There are certain indicators which could help in forming appropriate entry and exit strategies. Below is the chart of Hindustan Unilever (HUL) with advanced indicators applied on it. Read below to know more:
HUL Weekly chart – Parabolic SAR
Hindustan Unilever (HUL) is witnessing classic momentum on upside since a year and recently made its new lifetime high near 1880 levels in yesterday’s session. So for the stocks that are in uptrend and exhibit an appropriate setup it is best to buy them on dips
Indicator Analysis: We have used Parabolic SAR indicator with ADX indicator on the weekly chart. The Parabolic SAR indicator is considered a good timer indicator that uses trailing stop-and-reversal method to determine appropriate exit and entry points. Basically, if the stock is trading above the parabolic SAR one should buy or stay long & if the stock price is trading below the SAR then one should sell; whereas the ADX indicator shows the strength of the trend and also confirms the direction with respect to the Parabolic SAR indicator. When the ADX rises and shows a strong trend one should use a trailing stop loss that’s where Parabolic SAR helps in identifying the trend and trailing it.
On the chart we can see that the SAR is below the price and one can trail its stoploss to that level, while dips can be used as a buying opportunity. We can see the +DMI (Directional Moving Index) is above the –DMI and the ADX is quoting near 13 levels which indicates positive momentum is about to build up in the stock. One can stay bullish as far as both indicators support the uptrend.
One should definitely avoid catching a top in such outperforming stocks and buy on dips should be the ideal strategy in order to profit.
We have been identifying such amazing stocks on daily basis by applying Elliott wave clubbed with indicators. Get detailed Equity research analysis in our report published under the name “The Financial Waves STU” Know more here
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