Last Updated on Oct 14, 2022 by Anjali Chourasiya
We witnessed an extremely choppy market. Indices remained extremely fragile. But stock-specific moves continued well. I prefer to remain stock-specific longs with a cautious approach. One such counter where good formations are underway, is Sun TV. Let’s dive deep into the formations and figure out good opportunities.
Table of Contents
Monthly: Price action
Sun TV has been a highly volatile counter. Though from the extreme lows of 2009, the counter is holding its trend well. There are two trendlines, one being white, which is holding just perfectly. The event of 2020 was extreme, where the counter broke the support trend line for one candle and immediately recovered in the next one. The bottom at that time was made near previous lows, which are highlighted with a yellow colour trend line. The trend remains intact so far, and the recent bounce is also from the same trend line.
Weekly: Price action
Broader consolidation is seen on the chart, where the price has been in a sideways consolidation since 2020. The first positive sign has been the breakout of the downtrend line made on the chart, right from the peak of 2018 (highlighted in blue colour). Price decisively crossed the blue trend line and sustained above it. White trendline breakout (if it gets confirmed), then it would look like a cup and handle formation breakout and would confirm the trend reversal after many years. But one needs to keep an eye on the first reversal sign and keep stock on the radar.
This massive curve formation (consolidation) can be seen on the chart. The best part of the formation is that it has been decently supported with a stronger RSI which is a momentum indicator and confirms the strength. The present RSI is reaching near 70 and it may soon enter the overbought zone. That move will confirm the extreme strength in the counter and may validate the present up move as a trend reversal move from down to up.
MACD is a lagging indicator and confirms the trend once it emerges. Here we can see that the chart is reversing from the low and MACD has reversed from the extreme lows with the first crossover. MACD has also recently crossed the zero line, which confirms that the trend may gain strength. Due to the lagging nature of MACD, this counter can be shortlisted as a buy-on dip.
Super trend please again a trend-following indicator. It is very clearly seen that during the downfall, the super trend acted as the perfect resistance. As the counter started its uptick from the extreme low, the super trend again offered good support. After a minor decline, the stock is again resuming its uptrend and showing a super-trend bullish breakout.
Ichimoku is one of the advanced trends following indicators. In this indicator, there are multiple observations to be noticed. As we can see, the price is crossing the Kumo cloud on the upside, showing the first bullish sign. Tenkan Sen and Kijun Sen crossover is also confirmed. On a further rally, the future cloud will also turn bullish, making the stock more attractive at the present zone.
From the extreme lows, the counter made its first higher bottom. Using the most recent bottoms, the Fibonacci extension is plotted. The Fibonacci extension helps to set targets for the newly emerged rally. It is clearly seen that the price (after crossing the recent swing high) may enter the higher top and higher bottom formation. The target can be 100% and 161.8% which is near the 800 and 1000 zone. Those levels are coinciding with the consolidation price and the previous high (which is making them more reliable).
To understand the formation better, it makes sense to look at the lower timeframe. The most interesting indicator is Ichimoku. In this lower timeframe, the trend clearly emerged. Sankou Span A and B are clearly inching higher with strong Tenkan and Kijun Sen. Every decline can be the best buying opportunity.
Ratio chart: Weekly: Sun TV and Zee Entertainment
Since 2016, Sun TV has clearly outperformed Zee Entertainment. The sudden decline of the chart confirms the outperformance of Zee Entertainment. But once again, after taking support of the white trend line, the ratio chart is going higher (taking support of the yellow trend line). This is a clear sign of the “likely” outperformance of Sun TV over Zee Entertainment.
Ratio Chart: Weekly: Sun TV v/s TV18 Broadcast
This ratio chart of Sun TV and TV18 Broadcast shows a bounce from the extreme lows, equaling 2015-16 lows. A steady rise on the chart confirms the likely outperformance of Sun TV over the TV18 Broadcast. One needs to be cautious near extreme highs (22-24 zones). Till then outperformance is likely.
Putting it all together
Monthly price bouncing from the extremely long trend line, weekly price breakout of downtrend and possibility of entering uptrend, weekly RSI about to confirm extreme strength, weekly MACD crossover and zero line crossover, super trend breakout, Ichimoku Kumo cloud breakout is making counter more attractive. The Fibonacci extension is placing its targets near the previous peak. Daily Ichimoku 5 confirmations are making it more attractive. The ratio chart is also making Sun TV a better play over TV18 broadcast and Zee entertainment.
Statutory Disclosure: Kindly note that this update is only for educational purposes. It is safe to assume that my personal position, my fund’s position, my client’s position and my relative’s position may be open on the counter. Prefer to take the advice of your financial advisor before initiating any position.