Breakout soon! Top swing trading ideas to watch out for Friday – Dalal Street Investment Journal

The stock is about to breakout of big cup and handle pattern.

On Thursday, after opening the day with solid gains and trading in green territory for the major part of the session, it succumbed to a sharp sell-off in the last hour of the session. As a result, it ended with a loss of nearly half a per cent, near the day’s low. Though it managed to close above the 20-DMA support, it declined below the 13-EMA.   

On the daily chart, it formed another sizeable bearish candle with an added distribution day. In any case, if it closes below the 20-DMA, the daily and weekly bearish patterns will get the required confirmations of their implications. The RSI took support at two prior lows and it closed around level of 60. The MACD line is below the signal line while the histogram shows an increased bearish momentum. Since the first week of July, Mansfield’s relative strength indicator has sustained below the zero line. At the same time, RRG RS and momentums are just oscillating around the 100 lines. This indicates the underperformance of the index compared to the broader market.

Going ahead, the theme of sector churning and stock-specific outperformance is likely to remain intact and hence, we have come out with a list of stocks that should be on your radar. 

Here is the list of stocks:   

LT Foods: The stock is about to breakout of big cup and handle pattern. And, interestingly, this pattern is spans over four and half years. For the last three weeks, the stock is registering above-average volume. Its relative price strength is as high as 81, indicating outperformance as compared to the other listed stocks. It is trading above the key moving average and is around 9 per cent above the 50 DMA and 18 per cent above the 200 DMA. All the moving averages are in an uptrend. The MACD histogram shows an increased bullish momentum. The RSI is in a bullish zone.

The ADX (20.09) shows strength in the trend and +DMI is above the ADX and -DMI. The KST has given a buy signal and the RS momentum and RRG RS are above the 100 zone. It is also above the anchored VWAP. Currently, it is at the prior pivot level. A move above Rs 104 is positive.

Sumitomo Chemical India: On Thursday, the stock has advanced nearly 3 per cent and recorded good volume. The volume has turned out to be greater than 10 and 30-days average volume. The stock is trading above the key moving average like the 20, 50, 100 and 200 DMA. Interestingly, all the moving averages are in an uptrend. The stock after registering a high of Rs 510.88, it has entered into a corrective phase and it has resulted into a formation of a triangular pattern.

The leading indicator, 14-period daily RSI has given positive crossover and it on a verge of downward sloping trendline. The fast stochastic has managed to cross above its slow stochastic line on the daily chart.  The ADX (21.74) shows strength in the trend and +DMI is above the ADX and -DMI. Watch out for this stock above the level of Rs 495.

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