Stay Invested In Pivotals Showing Bullish Trend

Updated: May 18 2003, 05:30am hrs
The indices confirmed an intermediate uptrend in the last week as scores of mid-cap stocks moved well above their earlier intermediate tops indicating that the major trend of many of these stocks is up. The BSE-500 moved above its earlier intermediate top, confirming a start of a major uptrend for many mid-cap stocks. The frontline stocks, however, were late to participate and naturally the Sensex and the Nifty are still below their earlier intermediate tops and yet to confirm a change in the major trend.

The target for the Sensex to confirm a major uptrend are 3226 and 1040 respectively. Now, if more pivotals join the current intermediate uptrend, the possibility of the confirmation of the major uptrend or a start of a new bullrun are likely.

On the other hand, if the Sensex and the Nifty are unable to confirm a major uptrend in the current intermediate uptrend, then a higher intermediate bottom in the next intermediate downtrend will also confirm the same.

The market breadth was quite bullish as the number of advances were well over the number of declines on all the up days. The number of stocks making a new high on the rise and the number of new lows declined substantially and as a result the New High - New Low index is well in the positive territory and exhibiting higher levels, which is a very bullish sign.

The only weak sign is that the small stocks have not only taken a lead, but small traders and investors have started looking at penny stocks.

Usually small traders and investors are absent during the start of a new bullrun and hence traders must look for booking profits at higher levels especially close to the strong resistance levels. They can again pick up long positions after a decline. As I have been doing in the past few weeks, I will take a look at a few select stocks today.

ITC
ITC was discussed by me earlier and was advised to be picked up on a breakout above 690 as the stock has closed above its earlier intermediate tops and soon the stock will exhibit higher levels. The relative strength line for the stock is already above its zero line since quite some time and the stock will have to close above 710 and 725 if the stock has to exhibit higher levels in the current intermediate uptrend. However, as the major trend of the stock is up, investors can pick up long positions in the stock at the current level and traders must trade the stock on the long side. As the stock is one of the pivotals, it will lead the next bull market as the stock is already in a major uptrend while the indices have yet to confirm a major uptrend.

ABB
ABB is already in a major uptrend and the stock after consolidating between its 30 WMA on the lower side and 330 on the higher side has broken out of this consolidation and moved higher. Investors can pick up the stock at the current price or between the current price and the 330 level as higher levels by the stock will soon be exhibited. The relative strength line for the stock are bullish and is trading week above its zero line. The stock is soon expected to move higher and investors must get into the stock. The weekly MACD for the stock has again started moving higher suggesting that the momentum of the stock was up and use any minor decline in the coming week to add more long positions.

Thermax
Thermax broke out after a long consolidation and this breakout of the sideways consolidation was with a strong spurt in volume, which is a very bullish sign. This stock is also one of the capital good stocks and with most of the stocks in this sector outperforming the indices, this stock will soon exhibit higher levels. Use any minor decline in the coming week to get into the stock and stay invested in the stock. The weekly MACD for the stock has turned up recently suggesting that the stock will exhibit higher levels as the momentum of the stock is on the higher side. Use any pull back towards the 160/165 level to pick up more long positions.