The Source: Skot Kortje, Stock Trends Analyst,
The Stock: Tata Motors Ltd. Recent close: $9.61 (US)
Trend: A big winner last week among foreign stock markets was India. Despite retreating from Tuesday's high of 14,930, the Bombay Stock Exchange SENSEX Index ended the week up an impressive 14% to close at 13,887. Successful national elections bolstered prospects for the Indian economy with a promising mixture of stability and growth, giving international investors good reason to jump into Indian stocks. The SENSEX has a Stock Trends Bullish Crossover indicator, indicating the new long-term bullish trend for this important Asian market.
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Many of the exchange traded funds that focus on Indian stocks advanced significantly last week on high volume of trading. Among these ETFs are:
iPath MSCI India Index
Powershares India ETF
Wisdomtree India Earnings ETF
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India Fund Inc.
The DPF India Opportunities Fund , a closed-end investment trust traded on the Toronto Stock Exchange, also attracted extra trading activity and finished the week up 18%.
The Trade: Although investors can be advised to increase their exposure to the Indian market through an number of diversified funds, one multi-national automotive name deserves this timely attention as well. Tata Motors Ltd. is a current Stock Trends pick and a Bullish Crossover.
The stock jumped 26% last week on unusually high trading volume. Trend followers would have first been alerted to TTM when it turned Stock Trends Weak Bearish two months ago after the stock advanced to $4.50. The share price subsequently rallied to $8 where it plateaued and traded in a range until last week's impressive move. Recently improved credit provisions for the company's earlier acquisitions of the U.K.'s Jaguar and Land Rover brands helped restore investor confidence in Tata Motors' balance sheet. In terms of the market timing of this trade, Stock Trends interprets the combination of a new Bullish trend, strong trading volume, and the solid price move above the $8 resistance level as a buy signal.
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The Upside: Technical traders always look at a stock's price history for signposts. These signposts give guidance when the stock hits significant price levels. TTM's current share price corresponds with the price level that was held last summer when the stock's downward trend held ground in the $9 to $10 range until it renewed its slippage to a low of $3.50 in October. Traders in TTM will now be keying on the way the market is able to propel the stock above the $10 level. If money flow into TTM is substantially buoyed by investors clamouring to play the rising Indian market, shareholders will book profits to the $16 level.
The Downside: Investors should always factor in the uncertainty of price action when they make a trade. Even if the trade turns out to be positive, the price action can threaten the outcome. This may result in trading losses as the stock fails to perform as expected. Here we anticipate that TTM will move through $10, but what if it fails? The stock could be exhausted here after its big gains since March, or it could falter back to the $8 level. This is a new Bullish trend, so support is not yet established along the trend line (Stock Trends uses the 13-week moving average as the intermediate term price support in a more mature bullish trend). New TTM investors should set a stop price at the $8 level.
Skot Kortje has been analyzing stock market trends for 15-years using trend analysis. His Stock Trends indicators have been published by The Globe and Mail since 1995. For more go to