Sell Apollo Tyres Future at Rs 77.2; SL Rs 82: Nirmal Bang

The stock has advanced since December’11 and the rally halted in early April’12 as the stock formed a Complex Bearish Head & Shoulder Pattern.

There was emergence of a rising wedge pattern at the right shoulder which gave an early indication for a downside break in the pattern.

There was negative divergence observed in RSI in the month of April’12 which indicated an impending trend reversal on cards. The current RSI reading is below the bullish zone of 40 levels which is negative.

The MACD after a negative divergence gave a bearish crossover in late April’12 and is currently below the 0 line. The MACD histogram is currently in the negative territory indicating bearish momentum in the stock.

The stock has violated the Bearish Head & Pattern neckline which validates the pattern breakdown in the stock and indicates a trend reversal.

The counter on weekly chart has formed a Bearish Engulfing pattern which has engulfed its previous three candles and was later followed by a bearish crossover in MACD.

All the above evidence indicates limited upside from the current levels and suggests that the bears are in control of the current situation.

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