When you track stocks for long time - you start to develop a sense of how stock behaves and when its worth trading and when it's not. Let me give you one example -
Take Example of Videocon -
Videocon stock made a big move in the week of Jan 09. This is what I tweeted post that move
The reason why I recommended to ignore the move was stock's past behavior. Earlier also, stock used to make this one off move and then followed by nothing.
Here's what happened? -
The stock in following two weeks gave up all the gains and is back to precarious support level of 160. Now am I surprised with stocks behavior? No absolutely not. The stock has a bad reputation of not following through and hence that big move in the week of Jan 09 was a good AVOID.
Moral of the story: It's important to pay attention to stock's historical moves.
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