Mind Tree Ltd - Accumulation, Profit Booking and Fear(Technical analysis Mumbai India trading).

Market has been continuously moving in uptrend for past approximately 1 month. In this great rally we booked profits from  5% to 10% in more than 15 stocks(Allahabad bank, CEAT Ltd, DLF, Reliance communication, Prestige estate, ONGC, JP Power, HDFC, Coal India, Godrej Industries, State bank, UPL, Reliance Power, Indiabulls Real estate and lot more).If you wish to see analysis of these stocks please read our blogs of past 20 days. This rally was really a boon to traders.

Now coming to today's pick, this pick is very different from the way we have been technical analysis till today. We have used the smart money approach to pick this trade.Smart money are those investments made by traders silently and then later booking profits. We see smart money flow in Mind Tree regularly.

Smart Money flows in three steps :-

Step 1 Accumulation – In this phase smart people accumulate stocks in small quantities for a large period of time like SIP. They keep accumulating till a point where there are no sellers. At one moment of time there are only buyers and stock starts moving up.

Step 2 Profit Booking – Once the accumulation phase has finished and they have enough stocks in hand at a very decent rate they start selling  the stocks as the stocks move each level up. At every level they keep booking profits of the stock they had accumulated in the accumulation phase. In this phase common investors start investing thinking that this stock is doing good.

Step 3 Fear – As the trader is booking profit at every level there comes a climax where the stock is not ready to move up. Smart money is dumped at this point completely. This leads to increase in sellers and the stock starts going down. This phase  is the Fear phase where  weak hands start exiting thus creating more panic. Again in this downward movement there is a climax there is a support, smart money again reenters and this cycle continues. You can see same kind of pattern in Mind Tree. Below is the graph for the same. We expect accumulation phase to start soon.  

Also see the following video on Mind Tree:-

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See syllabus for Technical analysis training in Mumbai,India. 

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