Infosys Shapes Flat Base, But It Needs Work

• Paul Whitfield
• On 6:11 pm EST, Wednesday November 4, 2009

Technology services outsourcer Infosys Technologies (NasdaqGS:INFY - News) is working on a flat base.

The lowest point 15f the base is 10% off the high, conforming to the model of a flat base.

Action in a flat base is mostly sideways, sometimes with a slight dip. Infosys fits that characterization.

The base is six weeks old. The potential buy point 19 the left-side high plus 10 cents, or 50.20.

Volume should dry up at least slightly in a flat base. Infosys is less impressive on that score. It shows several down weeks in above-average volume.

The negative action kicked its Accumulation/Distribution Rating from A- when the base began to D- as of Wednesday's IBD. The severe plunge in the rating is a warning.

On the plus side, trading was tight in three of the base's weeks. That's a positive sign.

Also, the RS line isn't far off a high, and Infosys' sell-off has not been severe -- as the flat base illustrates.

How should an investor respond to this mixed picture?

With the market in correction, there's no need to act. All buys are off the table in a correction.

Time could help Infosys. Its base so far has a lot of distribution.

Buzz up!