Investors must continue to watch only those sectors in which stocks have bottomed out and pick up only those stocks, which have been exhibiting a relative strength. Other stocks should be traded on the long as well on the short side and no investments must be made until there is a strong confirmation by the price as well as the volume indicators that the sectors and the stock have bottomed out.

I have been tracking only those sectors which have been bottoming out or which have bottomed out. A few weeks back I had suggested to keep a track of the paper sector. Many stocks in this sector are in a major uptrend and there are good opportunities for investors to get into a few of these stocks.

I will again take up this sector today and we will see how the stocks within these sectors have been performing. I will look at only those stocks which have been trading regularly above the base price and which have been leading in this sector. Stay away from other stocks in this sector.

The stocks from the weak sectors must be traded on both the side and those traders who can trade the stocks on both the sides will win in the current environment. To succeed in these conditions, one must trade the markets mechanically and should keep a strict stop.

The best way to succeed in trading is to use a trading system, which works in all types of markets i.e. in the bull as well the bear market. I have tested a trading system and have been using it to trade the markets on the long as well as the short side. The trading system keeps the emotions at bay and this is the only way a trader can keep control of the greed and fear.

Ballarpur Industries
Ballarpur Inds has bottomed out and has been exhibiting ascending intermediate tops and bottoms and has been staying above its rising 30 WMA. The stock has recently broken past its neckline of the inverted head and shoulder formation suggesting higher levels for the stock in the coming months. Investors must hold on to the long positions and more long positions in the stock can be added at the current level.

The inverted head and shoulder formation will give the stock a minimum target of 40 points on the upper side from the current level. The breakout of the neckline occurred with a rise in volume. This is a bullish sign. The relative strength line for the stock is bullish suggesting that the stock is outperforming the indices.

ITC Bhadrachalam
ITC Bhadra also broke out of the inverted head and shoulder formation in the last week and has been zooming ahead with a rise in volume. The stock is trading well above its rising 30 WMA and investors must hold on to the long positions. More long positions in the stock can be added in the minor correction in the coming weeks or when the stock pulled back towards its neckline. The breakout of the neckline occurred with a spurt in volume and this is a bullish sign. Higher levels in the stock are expected in the coming weeks and traders must trade the stock on the long side.

TN Newsprint
TN Newsprint is the other stock in this sector which has been exhibiting a bullish relative strength as the stock has moved past its 30WMA and has been zooming ahead with a spurt in volume. The stock will have to close past 41.50 in the current intermediate rise to confirm that the major trend of the stock is up. Investors can get into the stock at the current price and may add more long positions once the major uptrend is confirmed. The relative bullish strength means that the stock is performing better than the Sensex.

West Coast Paper
West Coast Paper is in a strong intermediate uptrend, but is still below its earlier intermediate top. The stock has been exhibiting large swings in the past few months, resulting in the oscillation about its 30 WMA. There has been a rise in volume but there are not enough signs that the stock has bottomed out. Investors must wait for the stock to exhibit higher intermediate bottom to confirm that the major trend is up.