The new economy stocks are still in a major downtrend and investors must stay away from them. Only traders must trade these on the long as well as the short side.

Investors must look at the 30 weekly moving average (WMA) for the long term while they can use the 10 WMA for taking positions. A 30 WMA is simply the closing price for the past 30 weeks divided by 30. This long term moving average gives very few whipsaws.

Many old economy stocks have recently gone into a major uptrend by crossing their earlier intermediate tops and also by closing above their respective 30 WMA. A few of them have been pulling back towards this long term moving average giving an excellent opportunity to enter the market with a closer stop loss.

Usually when the stock is in a major uptrend, it will try to stay above this long term moving average and the intermediate corrections will result in the stock pulling back towards this long term moving average. It will take a support at or around this average and will start moving up again. If a stock is in a major downtrend, this long term moving average will act as a resistance to any intermediate rise.

Today, I will take a look at the public sector Banks. Many stocks in this sector have bottomed out and are in a major uptrend. There are opportunities for investors to add to the long positions in this sector and investors should utilise this opportunity for the next intermediate rise, which could be seen in the sector quite soon.

Bank of Baroda
Bank of Baroda is in a major uptrend as the stock has exhibited ascending intermediate tops and bottoms and has been staying above its 30 WMA.

However, the stock is facing a strong resistance from the ascending trendline and unless it is able to breakout of this trendline with a strong volume, higher levels may not be seen. Investors must wait for a breakout above this ascending trendline with a spurt in volume and must get into the stock. Currently, the trading volume in the stock has not been quite encouraging.

Bank of India
Bank of India also went into a major uptrend along with the others in this sector as the stock moved past its earlier intermediate top and its 30 WMA with a rise in volume. As the volume has been supporting the rise, higher levels could be expected in the next intermediate rise and investors must stay invested in the stock. The relative strength line has turned bullish suggesting that the stock is outperforming the indices and more long positions can be added in any correction. Traders must trade the stock on the long side.

Corporation Bank
Corporation Bank is in a major uptrend as the stock moved past its earlier intermediate top and is in a confirmed major uptrend. The relative strength line of the stock has moved well above its trigger line indicating that it has been outperforming the indices. Investors must hold on to the stock. The intermediate trend is up and traders must trade the stock in the short term on the long side as higher levels are expected. More long positions can be added by the investors in the next intermediate correction. The bullish relative strength line suggests that higher levels in the stock will be seen soon.

Oriental Bank of Commerce
Oriental Bank of Commerce is also in a major uptrend like the other stocks in this sector. The stock recently closed above its earlier intermediate top and has been trading above its 30 WMA. The relative strength line has been rising and is above its trigger line suggesting that the stock is outperforming the indices. However, the volume action by the stock has been not quite encouraging and this is not a bullish sign. Also, the stock is not one of the leaders and investors must pick up other stocks in this sector.

State Bank of India
State Bank of India broke out of the strong descending trendline in the last month and closed above its earlier intermediate top and its 30 WMA. Thus, the major trend of the stock is up. The stock is currently in an intermediate uptrend and is consolidating sideways in the last week. A breakout from this sideways zone will give an excellent opportunity for traders to pick up long positions. Investors must hold on to the stock and may add more long positions to it at the current level. The relative strength line is bullish and higher levels in the stock are expected soon.