[Premium] Trade Of The Week

Despite the Nifty Auto Index being flat since August, there's still money flowing into several individual stocks in the sector.

One we've been keeping an eye on for a long time is CEAT Ltd., which is now breaking above long-term support/resistance near 1,100. This confirms a long-term bearish to bullish trend reversal and suggests the stock could be on its way back to all-time highs over the next 12-18 months.

Click on chart to enlarge view.

And on a relative basis, the stock is also carving out a multi-year base relative to the Nifty 50, suggesting its trend of underperformance/in-line performance may be coming to an end.

Given the clear improvements in relative strength, absolute momentum, and absolute trend, our conclusion is that we want to be erring on the long side of this stock.

Any weakness back towards its initial breakout level of 940 is a buying opportunity, with an initial target near 1,650 and a secondary target back near its all-time highs of 2,000 over the next 12-18 months.

Make sure to check out our other weekly post, "Three Charts For The Week Ahead."

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team