Trading Rule: A strong Trending stock is always a great buy on pullback.
On August 18 2014 - I covered Ceat based on the above trading rule. The stock had just bounced from 100 dma and was at 522 then. Twenty one days later - stock is at 792 - gains of 51.7%.
Here's what I wrote:
Ceat has been one of the Leadership stock of the Bull Market. The stock has always rallied pretty strongly from leading moving average i.e. 50 dma and 100 dma. The Big question: Will it follow through and rally with same intensity as in the past? Well, the History is on the side of the stock
Here's what happened?
The stock just took off from 100 dma.
Lesson: Never ignore momentum stocks on pullback. They become very attractive and give stunning returns on ralllies. As always, there is no certainty in the market. The only difference is that odds are in your favor.
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