Today's Pick - Siemens

We recommend a buy in Siemens from a short-term perspective. From the charts of Siemens, we observe that the stock had been on an intermediate-term downtrend from its January 2008 peak of Rs 1,047 to its 52-week of low Rs 363, recorded in early July. Nevertheless, the stock reversed direction, after taking support at around Rs 400 (a significant long-term support level) recently.

The stock’s reversal was supported by the positive divergence in the daily relative strength index (RSI). On July 7, the stock conclusively penetrated the intermediate-term down trendline and also crossed over the 21-day moving average by gaining 6 per cent with high volume. We notice that there is an increase in volume over the past four trading sessions.

The daily RSI is rising in the neutral region towards the bullish zone and the weekly RSI has recovered from the oversold territory. We are bullish on the stock in the short-term. We anticipate the stock to rally until it hits our price target of Rs 540 in the approaching trading sessions. Traders with short-term perspective can buy the stock while maintaining the stop-loss at Rs 455.

via BL