CEAT, HUL: These 5 stocks can rally up to 15% on conquering MACD hurdle

Technical indicators can be useful parameters to gauge the short-term price movement in a stock or an index to either make quick profits or trim losses. One of the measures, Moving Average Convergence Divergence (MACD), is used to assess the power of price movement in a market. 

The indicator is a momentum indicator, derived from moving averages, and is calculated by subtracting 26-days exponential moving average (EMA) from the 12-EMA. The resultant values are used to obtain 9-days EMA. Using the three EMAs, a MACD line is plotted on charts. A MACD also has a zero line which provides significant detail about the sentiment and underneath breath of a stck or an index.

Any move below the zero line is inferred as a bearish signal where prices are expected to fall further. Meanwhile, a reversal is anticipated when the MACD line moves above the zero line to reflect strength and momentum. In such a scenario,  market participants can expect stocks to perform better amid sustainable gains.

Currently, 45 of the Nifty 500 constituents are trading below the zero line on the Moving Average Convergence Divergence (MACD) while five stocks are showing positive reversal with an attempt to conquer the zero line hurdle. 

Stocks trading in the negative crossover, under the zero line, are Petronet LNG Limited, IPCA Laboratories Limited, Suven Pharmaceuticals Limited, Bajaj Electricals Limited. However, Blue Star Limited, Procter & Gamble Health Limited, Linde India Limited, and Amara Raja Batteries Limited are showing positive crossover.

On the contrary, the five stocks attempting to cross the zero line on MACD with a positive sentiment are CEAT Limited, Indian Energy Exchange Limited, Hindustan Unilever Limited, Cummins India Limited, and Sequent Scientific Limited. Once done, these stocks may see an upside of 10-15 per cent.

Here’s the list of stocks showing positive momentum on MACD:- 

MACD 5, source :spidersoftwareindia