Breakouts can surprise on the upside and sometimes the stock post breakout can go to Mars.
Let me share one example: Eicher Motors
Source: Chartalert.com
Eicher Motors broke out above 1440 in September 2011. The stock rallied and then pulled back to 1440 by Dec 2011..yes zero percent returns in 3 months. I know many folks would have passed judgment – bad call and moved on. Just see what stock has done between 2012 and 2016. Yes, it has moved up 17 times. Yes 17 times.
Yes when stocks breakout, they are still cheap and attractive even 20-30% higher provided one has a good risk reward set up there.
Here’s Eicher Motors at 2000 levels in June 2012. Even from 2000 levels it’s up 13 times
Eicher Motors: Buy Point? http://t.co/K2BrXiq7
— Deepak Singh (@smarket) June 26, 2012
The Learning: Never ignore a Good quality Large Cap breakout
Here’s Maruti doing the same
Source: Chartalert.com
Maruti stock broke out in 2014 and is already up 3.5 times