Technical Analysis

Stock trading call: Buy Snowman Logistics

Yoganand D | Updated on December 29, 2019 Published on December 29, 2019

Investors with a high risk appetite can buy the stock of Snowman Logistics, a small-cap company, at current levels. In August, the stock registered a new low at ₹26.6 and arrested its long-term downtrend.

It took support in the band between ₹26 and ₹28 in September and began to trend upwards, triggered by positive divergence in the weekly moving average convergence divergence indicator. Since then, it has been in a medium-term uptrend.

While trending up, the stock had breached a key resistance at ₹35 in late September, which turned into significant support levels. The stock took support from ₹35 in early December and continued to trend upwards, and has been in a short-term uptrend.

Last Friday, the stock surged 4 per cent, accompanied by an above-average volume, strengthening the uptrend.

Moreover, the stock trades well above its 50- and 200-day moving averages.

It currently tests a key resistance at ₹42, with a positive bias. The daily relative strength index (RSI) has entered the bullish zone from the neutral region, and the weekly RSI has also entered the bullish zone, backing the uptrend.

Besides, the daily as well as the weekly moving average convergence divergence indicators feature in the positive territory, supporting the bullish momentum. Overall, the medium-term outlook is bullish.

A decisive rally above the current resistance can pave the way for an up-move to ₹46 and then to ₹50 over the medium term, with a pause at ₹46. Traders can buy with a deep stop-loss at ₹38.

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Published on December 29, 2019
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