Lots of times this happens: You Buy a Breakout stock with lots of hope and all it gives is a heartbreak and you just get stuck with pain not knowing what to do next. Welcome to the harsh realities of market and there is nothing anybody can do anything about it. All you can do – Accept it, follow the rules and move on
The pain can be intense when everything on the surface [sector] looks good except the stock you are in.
India posted strong GDP Growth on Friday and this is good news for Banking stocks. Bank stocks are considered best plays during economic growth expansion period.
No wonder:
1. ICICI Bank and SBI stock both have bounced big time from panic lows
2. Yes Bank stock made all time high in July-August [only to disappoint later]
3. RBL Bank stock has closed at all time high on weekly chart.
4. Axis Bank seems to be breaking out
This is what Yes Bank did on Friday – Gap down Selling
Source: Chartalert.com
The hope was that Yes Bank stock would hold 355 levels but the stock sold off – Gap down and closed near 340. This despite no clear reason:
Now the move was not sectoral – all other stocks in the sector seem to be doing fine. RBL Bank now looks like the best breakout play. Price Action wise – the stock is a good buy near the price of 610-613
Source: Chartalert.com
Here’s what we can do with Yes Bank
1. Liquidate 50% Yes Bank position on any minor Bullishness on Monday. [Reduce risk]
2. Look to swap that position with any other Banking stock on decline [like RBL Bank near 610]
3. Yes Bank before making all time high took support at 327-335 and hence on any decline can take support here.
Source: Chartalert.com
If you see Yes Bank finding its feet near 327-330, then look to add position with a definite stop loss below 322.
The Big picture message: Reduce risk right now by selling half of the holdings on any minor bounce and then watching from there. On decline – looking for evidence of support near 327-330 and if you get comfort of that – look to add positions and then have a hard stop loss below 322.
The worst thing people do: when they encounter breakout failure – they sell a breakout stock that’s working in name of profit booking but keep holding the loser.
Having said all the above: Do I know what Yes Bank stock is going to do? Nope. I have no idea. The whole idea is doing something so that one can manage pain for now and not regret later for not doing the right things even if that means taking some loss here, knowing fully well anything can happen like the stock can just simply rally from here.
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