Investors with short-term perspective can buy the stock of CEAT, which has witnessed a smooth upward ride for past few sessions. Following a short-term downtrend when the stock took support at around Rs 100 in late August and early September 2013, it reversed direction. This reversal was triggered by positive divergence in the daily relative strength index and price rate of change indicator. Since then, the stock has been on a short-term uptrend. While trending upwards, the stock decisively breached its 50- and 200-day moving averages and is hovering well above those levels. The stock’s bullish momentum continued and it broke out of its key medium-term resistance at Rs 125 by jumping 5.4 per cent with good volumes on Tuesday.

Both daily and weekly relative strength indices are featuring in the bullish zone. The daily moving average convergence divergence indicator is moving higher in line with the stock price and is hovering in the positive territory implying upward momentum. Similarly, daily and weekly price rate of change indicators are hovering in the positive area implying buying interest. Short-term outlook is bullish for the stock. In the short-term, the stock can continue to trend upwards and reach the price target of Rs 134 or Rs 137 in the approaching trading sessions. Traders can buy the stock with stop-loss at Rs 126 levels.

( Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)

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