The index made a very surprising move last week and gained more than 200 points in a span of 3 trading days all accompanied with high value turnover.
Now we have a confirmed break out from the existing downward channel from Nov 2010. This means we are out of the downward trend and is starting to retrace back to the previous high of 4413. The possible target level for the breakout is near 4340.
Amazingly, the bullish action last week not only broke the downward channel but also broke the 65 day and 130 moving average, as well as some standing resistance lines.
For the coming week expect a little bit of selling to occur as the RSI is on the overbought level. As long as the index stays above the 130 day and 65 day moving averages, it is still safe to hold on to your positions.
NI seems to be the stock you’d have to avoid looking only at how red the stock’s chart is as of current. However, even if NI is on the bearish side, there is a looming opportunity for a quick profit for this stock.
Looking at the stock’s RSI, we can see that it is way below oversold level, currently at 16.61. The previous instance when the RSI reached that low was on Dec 16, 2010 and a quick 50% rebound was made by the stock.
Is there a possibility that the same thing could happen again for this stock? Yes! The only problem is when that will come. It is still not recommended to buy at the moment since what we thought of low today might be lower on the following day. We are not sure whether the current price is the lowest since the stock has been constantly on the downward move and has stayed in the oversold level for a long time. However, we should be on the lookout for reversal indicators such as a cross followed by a white candle with the volume of the candle having at least 5 million units traded. If such a thing happens, expect the price to move upward up to 3.00 which is near the 65 day moving average giving you around 30% net profit from the current price.
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