Amtek Auto has been , is, and perhaps will be an important company in the space of Automotive Components manufacturing in India. Like most of these companies in this space, it too took a severe beating in 2008, falling from a high of 540 in 3Q 2007 to about 45 in Nov. 2008.
Since then it has been turning around - The Hindu Business Line has recommended it twice - both from the fundamental and the technical point of view. You can read these here and here. The technical call made in their Feb 27, 2009 suggested buying it at 73 with SL at 59 and target of 100. Snce then the stock has raced to 237/- in early Oct and began to correct and of late has been moving sideways.
Now, this is what I call a potential pull back in an uptrend. Also, note that we are not talking about a fly by company with shady records - we are talking about an established company with good record and one that will not disappear tomorrow. This in my mind is an important criteria for trading in intermediate time frames so that we do not lose money unnecessarily on unknown companies.
Ok, so let us look at the price action
of the last six months.
Even an untrained eye might notice that there is a significant support at 160-170 area. The Slow stochastic is entering oversold area and the width of the BB band is steadily shrinking. The time is ripe for a sharp move - which way we can not say with absolute certainty but we can take a low risk bet that if the level 170 continues to hold, the break could be on the upside with target of210 to 230Therefore, there a trading opportunity here to buy Amtek Auto between 180 and 184 with SL at 170 and targets of 210 and 230.. This means that maximum loss is about 8% and potential gains are about 14% and 24%.
Now that is not a bad risk reward ratio.
The time frame for this opportunity to be realized is about 3-6 months.
*This opportunity will be tracked for its performance in this blog.
If you have any comments please write to me at stockmarket.methods.in.madness@gmail.com
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Disclaimer: The above analysis is just that - my analysis. If you choose to trade on the basis of this analysis, you will be solely responsible for the outcome of the trade - profit or loss. Please keep in mind that trading and in particular day trading is not for the novice and there is significant risk of loss of capital in trading
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