Theme: Formalization of Indian Economy
The market reads events and then makes up its mind on how this will benefit which sector of the economy and which stocks can be taken to new highs.
Post demonetization and pre-GST implementation itself – one could see interesting move in leading consumption names:
1. Titan Breakout in March 2017
Source: Chartalert.com
Titan stock broke out above 450 around middle of March and now 8 months later – stock is up nearly 90%. Now one could have looked Titan breakout in isolation or part of a new theme that’s ready to move higher. It is here where most of the price volume technicians miss out
2. Hindustan Unilever. Breakout in week of May 12 2017
Source: Chartalert.com
As you can see in the chart above – Hindustan Unilever stock broke out in May and then it never looked back and rallied with huge intensity in following few months. There was another common theme emerging – most of these stocks had created resistances in 2015 and breaking out in 2017. The next one was Bata again clearing resistance of 2015
3. Bata India. Breakout in the first week of August 2017
Source: Chartalert.com
Bata India was also a big mover during 2010-2012 consumption bull market and this time on back of formalization theme – stock cleared a stiff resistance and managed a decent rally.
4. Dabur Breakout in the October 2017
Source: Chartalert.com
Dabur stock after a long time cleared stiff resistance it formed in 2015 and managed a breakout to new high in October and stock has managed a decent progress in last couple of months.
5. Nestle Breakout in the November 2017
Source: Chartalert.com
Nestle stock was the next to breakout to new high. It did that and then pulled back only to rally to new high
Conclusion
One should not look breakout in isolation but try to read them in broader context. If you do that, then it becomes easier to follow the next breakout and play the right stocks.