One should never chase a bus because bus in a bullish market arrives frequently. All one needs to do – look out for a new one with similar characteristics. The similar characteristics means the same sector.
Here’s one Case Study: Stocks in Oil Marketing companies
HPCL and BPCL both broke out to NEW HIGH in May 2016. They both then pulled back to retest the breakout point as support and then rallied again…in a pretty classic textbook style.
Here’s HPCL Chart
Source: Chartalert.com
How the Breakout eventually worked?
Source: Chartalert.com
Around the same time – BPCL too broke out and this is how it played out
Now, both the stocks retested breakout support on June 07 2016 and over few months later -rallied 40-50%. But this was not all – The market offered another opportunity from the same sector a month later –
The Stock: Indian Oil
Here’s another stock – Indian Oil from the the same sector that broke out in July- a full one month later than HPCL and BPCL breakout and delivered a compelling 40% returns
Source: Chartalert.com
The Science of Stock Price Action has a certain take on what happens when stocks break out. All we need to do: watch and find out: Is this the genuine bus and can it make up for the lost opportunity.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers