[Premium] Trade Of The Week

Rotation continues to buoy markets despite being very extended in the short-term. As a result, we want to protect ourselves by entering new positions with a very skewed reward/risk across multiple timeframes. And if there are multiple themes supporting that stock, even better.

Today's stock in focus is Britannia Industries, which is part of the FMCG Sector that we've been growing more positive on throughout November.

Starting with the longer-term perspective, we see the stock stabilizing above its recent lows of 3,380 and confirming the multi-year base breakout that occurred in July. As long as prices are above 3,380, then the trend is clearly higher in the stock with a 12-month price objective near 5,625.

Click on chart to enlarge view.

Here's a closer look at the daily chart finding its footing at those former highs and turning higher. Prices are above a rising 200-day moving average and momentum is diverging positively after briefly crossing into oversold territory, both positive signs.

And on a relative basis, prices have retraced 61.8% of their most recent leg higher and are starting to turn higher as momentum diverges positively.

Both the absolute and relative trends appear to have stabilized and are now turning higher to begin their next leg of upside. If the market is going to continue to be supported by sector rotation, then names like Britannia that have a strong foundation of support but have not yet seen any near-term momentum are likely to be among the next beneficiaries.

And if we're wrong and the market completely collapses from here, taking this stock with it, then our risk is well-defined and we can take our small loss and move on.

For now, as long as prices are above 3,380, the bias in Britannia looks to be towards 5,625 over the next 12 months.

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

And if you're a Premium Member, be sure to check out our other weekly post, "Three Charts For The Week Ahead."

Allstarcharts Team