Watch Out For These Stocks As They Are Showing Signs of Weakness
An outperforming stock as compared to the broader market. It has a strong Relative Strength Rating of 76. The stock is up 137.9% from a year ago as compared to 56.2% for the Nifty500.
The stock has had a good run in the last 20 weeks post its breakout from a 5-week, 12% deep Flat Base. The stock has gained 52% from the ideal buy point of INR 1400.
Srf Ltd. stock fell -4.34% this week, undercutting its 10-week moving average. It closed -2.68% below the 10-week moving average. However, the volume for the week remained below its 10-week average.
The long term support line, 40-week moving average, is still in uptrend. The stock is trading around 37.5% above the 40-week moving average.
The leading stocks often take support near its 10-week moving average. But if a stock closes below the line, that should be considered as an early sign of weakness. Closing below the line on a lower volume is okay, but staying there is not. At this point, you can monitor the stock carefully for signs of further weakness.
The stock appears on our idea lists: Minervini Trend Template
Indo Count Inds. has been an outperforming stock as compared to the broader market. The stock is up 87.1% from a year ago as compared to 56.2% for the Nifty500.
Most recently, the stock broke out of a 7-week, 25% deep Consolidation Base 4 weeks ago. However, the stock failed to make meaningful progress.
Indo Count Inds. stock fell 8.9% this week, undercutting its 10-week moving average. It closed -5.0% below the 10-week moving average. However, the volume for the week remained below its 10-week average.
The long term support line, 40-week moving average, is still in uptrend. The stock is trading around 35.0% above the 40-week moving average.
In a strong market, the 10-week moving average, can act as a support level for the stock. But, it can also act as a resistance level during a downtrend. At this point, if you do not have enough profit on the position, from a risk management standpoint, you may want to cut the position. If you have enough profit, you can monitor the stock carefully for signs of further weakness.
Gujarat Gas has had a huge run in the last one year. It is up more than 97.5% from a year ago as compared to 56.2% for the Nifty500.
On the earnings front, Gujarat Gas has an excellent EPS Rank of 97, which indicates consistency in earnings. The earnings and sales for the stock have grown by 128% and 12%, respectively over the past three years. Its 3-years earnings stability is 49, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 58% and 15%, respectively. The 5-years earnings stability is 56. The return on equity for the last reported year is 33%.
Gujarat Gas stock fell -4.6% this week, undercutting its 40-week moving average. It closed 1% above the 40-week moving average. However, the volume for the week remained below its 10-week average.
Gujarat Gas has a strong earnings profile with other positives. Also, the long term trend in the monthly chart is still in uptrend. For a long term leader, the 40-week moving average could certainly act as a support level and it could set up a new base around the line. But keep in mind that such base building may take months, even years. At this point, based on your profit cushion, you can either take at least partial profits or watch carefully for signs of further weakness. You can also use the 24-months simple moving average and the long term trend of the RS Line as an ultimate support for a long term leader.
Emami has been a laggard stock for the last one year. It has had a 44.5% move as compared to 56.2% for the Nifty500.
On the earnings front, Emami has an excellent EPS Rank of 86, which indicates consistency in earnings. The earnings and sales for the stock have grown by 11% and 2%, respectively over the past three years. Its 3-years earnings stability is 17, on a 0 to 99 scale (lower the better). Over the past five years, the earnings and sales for the stock have grown by 4% and 3%, respectively. The 5-years earnings stability is 17. The return on equity for the last reported year is 25%.
Emami stock fell -2.0% this week, undercutting its 40-week moving average. It closed 1.0% above the 40-week moving average. However, the volume for the week remained below its 10-week average.
The large-cap stocks often take support near its 40-week moving average and set up a new base around the line for future move. But such base building may take months, even years. If it is a long term leader, we definitely can give it more room and time to stage a recovery. But, that’s not the case here. Emami does not meet our long term leader’s trend criteria yet. At this point, we would consider this week’s close as a weakness in the stock.
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