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We recommend a buy in the stock of Venus Remedies from a short-term perspective. It is evident from the charts of the stock that since peaking out from Rs 340 in September 2010, the stock has been on an intermediate-term downtrend. However, in early February 2011 the stock knocked its long-term support band between Rs 195 and Rs 200. The stock subsequently started to consolidate sideways in a broad range between Rs 195 and Rs 235.
The long-term support band between Rs 195 and Rs 200 provided support for the stock in late March and also in mid May. Taking support from this band the stock jumped seven per cent with high volumes on May 24, triggered by positive divergence in daily relative strength index and price rate of change indicator. Daily stochastic Oscillator has displayed positive divergence.
The weekly RSI has also entered in to the neutral region from the bearish zone. Daily price rate of change indicator has entered in the positive territory signalling buying interest. Taking a contrarian stance on the stock we are bullish on it from a short-term perspective. We expect it to move upwards until it hits our price target of Rs 215 or Rs 223.5 in the days ahead. Traders can buy the stock with stop-loss at Rs 204.
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