[Premium] Trade Of The Week

After a few months of consolidation, money is rotating back into former leaders like Pharma and IT stocks. As a result, today we're looking at Biocon, which is providing a well-defined entry and skewed reward/risk at current levels.

Here's the stock on an absolute basis, attempting to break out above resistance at 442 once again after failing throughout September and October. Despite several false starts, the stock is still in a long-term uptrend as characterized by its rising 200-day moving average, series of higher highs and higher lows, and momentum staying in a bullish range.

Click on chart to enlarge view.

These factors on an absolute basis suggest a breakout is ahead and that we want to be long the stock as long as prices are above 415, with a target of 583 over the next 3-6 months.

We also like what we're seeing on a relative basis, where prices are retesting their breakout of a long-term base relative to the Nifty 500. The best stocks not only perform well on an absolute basis, but they also outperform their alternatives...and on a long-term basis, Biocon has been a significant outperformer.

Given the strength we're seeing on an absolute and relative basis, we want to be long Biocon above 415, with a target of 583 over the next 3-6 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