Science of Stock Price Action:
When stocks form a particular pattern, we make a projection based on past behavior without knowing whether the stock will actually follow the script. Sometimes, stock follows a pattern in a very textbook style. The probability of success is quite high if you trust large-cap liquid names.
Vedanta at 200 dma: A strong Bullish stock at 200 dma = Buy the dip Case
It has been seen that when stocks form a Bullish base at 200 dma i.e. it keeps holding a particular moving average for quite some time, they eventually take off in a big way. Here was Vedanta at 200 dma around May June 2017
Source: Chartalert.com
This is what it did in following 4-5 months
GAIL at 200 dma: Doing the same thing
When a stock manages a strong bounce from 200 dma, then whenever it comes down to that level again – it delivers similar behavior. GAIL bounced pretty strongly from 200 dma in September 2016. It came down to the same level in June July 2017 again. No surprise, this time again stock delivered similar result. Please see the chart below
Motherson Sumi Breakout: Push Breakout
When a stock quietly makes a NEW HIGH above a well-defined resistance and then sustains above it for few days/weeks, then it usually makes a follow through solid move without much noise. It’s called a Push Breakout…as the name implies pushing to a new high and then continue walking above it. Here’s the chart
Source: Chartalert.com
As you can see in the chart above: Motherson Sumi broke out above a well-defined resistance of 240 and sustained above it – resulting in more solid upmove in days and weeks to come. IT’S MORE LIKE CHALTE RAHO BULLISH RUN. I am glad I covered it as Live Case Study
Sun TV: Large Candle Breakout
Logic: Read here. https://www.smarketpremium.com/2017/08/22/live-case-study-sun-tv/
Source: Chartalert.com
As you can see in the chart above: Sun TV broke out with a large candle, pulled back and then took support at the base only to rally higher with intensity. Again I covered the stock as Live Case Study
Raymond: Large Candle Momentum
When a stock suddenly makes a large candle move from 200 dma, it’s a sign that stock is ready to rally big time. Raymond stock did the same in 2017
Source: Chartalert.com
Raymond stock later broke out to New high and I covered it as breakout play
Rain Ind: Breakout first Opportunity Later
When a stock breaks out with a large candle, it’s a start of big bull run. Rain Ind broke out above 65 and I covered it back then but then stock offered another another opportunity in June 2017
Rain Ind at 100 dma: The stock has done all the right things so far pic.twitter.com/WAxudNgXGH
— Deepak Singh (@smarket) June 22, 2017
The stock since then rallied another 3.5x.
Naukri Infoedge: Breakout Play
When a stock breaks out with a large candle, then all one can do is Buy and Hope. Infoedge/Naukri stock broke out with a large candle and now few months later – stock is doing it’s bullish bit
Source: Chartalert.com
Exide Ind: Breakout and Doing the right thing
Some breakouts can be very frustrating but if the stock post breakout is doing the right thing, then don’t lose Hope. Exide Ind is one such play. It broke out early this year but it has been frustrating hold for many. 2018 might be the year when breakout magic might play out
Source: Chartalert.com
Container Corp: Breakout and Doing the right thing
Concor stock broke out in August but it’s now Dec and stock has not done much since then
Source: Chartalert.com
Considering the amount of hardwork stock has put in since last four months – one can be optimistic about the future of the stock.
Power Trading: Breakout and Doing the right thing
PTC stock broke out in July but it’s now Dec and stock has not done much since then
Source: Chartalert.com
Will the patience of people holding this stock get rewarded in 2018. We will see
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