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Trading Strategy for the week ending January 30, 2000

Be cautious on upper levels in Sensex stocks

BSE Sensex: Black cloud formations in the daily Sensex chart, negative divergence and sell signals in RSI and MACD, indicate that any revival in Sensex stocks should be considered as an opportunity to exit. Last week, the Sensex had completed the 55-day cycle and this week it will complete 13 weeks from the low of 4209. Above 5382, bulls will dominate but the Sensex will have to close above 5630 for a real bull run. The chances of that are remote. In intra-day or intra-week, it may flare upto 5685 but at this level traders should exit from long positions. Below 5382 it can slide to 5280, 5210 or 5140. Expect all-round hectic buying above 5527. Traders can exit from all other Sensex stocks except for the following ones.

Reliance: It has formed a butterfly spread formation and a clear negative divergence in RSI will favour bears only. But it can flare upto Rs 338 or Rs 341. Expect heavy selling from these levels. Consider Rs 320 as weekly support. Below this level it can slide upto Rs 309 and thereafter don't remain long. Box chart indicates that it will face resistance at Rs 327.75 and Rs 338. If it is able to close above Rs 341, it can easily flare upto Rs 365.

ITC: The worst is over for this scrip last Thursday. Consider Rs 775 and Rs 754 as last major support for this scrip. Time goal days method indicates an unexpected price level for this scrip on the 24th trading session. For this week the level of 802 is weekly support. On upper side it will have to cross Rs 851 to generate all-round heavy buying. Above this level it will easily flare upto Rs 875 or expect a level of Rs 910. If it is able to close above Rs 902, then upper freeze sessions will start. Buy on every decline.

Ranbaxy: From the last few trading session, heavy accumulation is on and the chart has formed an inverse head and shoulder pattern. It's on the edge to spurt heavily. The level of Rs 964 and Rs 955 are crucial supports. A crossover above Rs 999 will take it to Rs 1037, Rs 1052 or Rs 1088. Below Rs 955, it can slide to Rs 930. Instead of selling at lower levels, grab this stock on every decline.

Zee: The level of Rs 1110 and Rs 1178 are trend-deciders. A crossover above Rs 1178 will take it to Rs 1247, Rs 1266 and Rs 1313. Below Rs 1110, it can slide to Rs 1090 or Rs 1070. But it should favour bulls only and in the next eight trading sessions, it may cross its all time high of Rs 1312. A close above Rs 1240 level will create all-round buying. For Monday, buy this scrip with a stop loss of Rs 1156 and Rs 1145. On upper side, it can flare upto Rs 1204 or Rs 1225. Buy this stock on every decline.

EIH and Hindustan Petroleum: Heavy accumulation is on in both these counters and they are ready to explode. Considering Rs 173 as rock-bottom support for EIH, traders can grab this stock. A crossover above Rs 186 will take it to Rs 199 and thereafter it can easily zoom to Rs 220. Positive divergence and buy signal in oscillators indicates HPCL will catch fire. Above Rs 167, it will favour bulls and it can zoom to Rs 181 or Rs 197. Expect an appreciation of more than 50 per cent in a month.

Snowcem and Electrolux Kelvinator: Both scrips are ripe for a fresh and fiery rally. Snowcem has already started its third wave in weekly chart and it will be of a dynamic nature. Above Rs 159 it will favour bulls and a crossover above Rs 172 will take it to Rs 210 with minor hurdle at Rs 190. From this level of Rs 167, it will double in the next three months. The worst is over for Electrolux Kelvinator and the chart indicates that above Rs 29, it will be in firm grip of bulls. In the short term, it can zoom upto Rs 42 or Rs 50. Investors can expect a price level of Rs 150 in the next six months. Traders can buy this scrip for risk free trading.

Moser Baer: Falling wedge in daily chart indicates that it is ready to spurt. Traders can see upper freeze sessions once it crosses Rs 325. It can easily flare upto Rs 345, Rs 370 or the last major resistance at Rs 380. Consider Rs 305 as weekly support. Any decline in the stock should be considered as an opportunity to buy. It may touch Rs 425 by end of this month.

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