Question: What is HDFC stock doing right now?
The stock has been moving up, down and nowhere. Actually, in last 18 months - the bias has been on the downside. It's only since March 01 - the stock has made some progress but it looks like stock benefiting from rising tide technically speaking.
Did HDFC offer any short term trading opportunity in last 18 months?
Answer: Yes when stock formed double dip at 200 dma
— Deepak Singh (@smarket) June 9, 2015
Question: When did we got first hint that HDFC stock is Avoid on Short term basis?
Answer: August 2015 when it broke 200 dma on daily chart
As you can see in the chart above - HDFC stock was at 200 dma. It formed a double dip support around May-June 2015. It even rallied from there but then succumbed to strong selling in August 2015
Question: What about HDFC stock price history?
Answer: HDFC made a fresh NEW HIGH above 2008 Highs in 2010. It was a Breakout
But post Breakout - the stock went in for long sideways consolidation with support at 610-625 and that consolidation lasted for more than 2 years. One of the key challenge with Breakout - sometimes stock do breakout but spend enormous time in consolidation and it really tests the patience of investors. All one gets during that time is price protection if one is very careful on where to enter.
Question: What has been the best trading opportunity that HDFC offered in last 6 years?
Answer: HDFC at 200 week moving average. Result= 100% returns in following 18-19 months
When stocks are in Long term Bull Market - the best investment opportunity comes when stocks decline to 200 week moving average. HDFC declined to 200 week ma during crash of August 2013. In following 18-19 months - HDFC, a large cap stock, delivered 100% returns.
Question: What happens after a stock delivers solid gains?
Answer: Stocks goes for a long Pause. It Builds a base and prepares itself for next run
The last run ended in March 2015. The stock seems to have built a solid base with 200 week ma now almost converging with the base of 1010. The stock almost went near the base in Feb 2016. The question one need to ask: Will HDFC stock retest the base or stock is again ready for another take off from the base. This only time will tell
Every stock follows a certain logic. The objective of my website is to narrate that logic and present a learning opportunity. It's based on Science of Stock price action concepts.
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I have recorded a video book titled Science of stock price action. The Book contains several patterns based on stock price action with illustration. But to make the learning fun and real for people who purchase the book - I discuss new patterns on an ongoing basis. If you find my work interesting - I will encourage you to buy the book and access new patterns discussed in April and May 2016. The idea is to demonstrate live how patterns unfold and work. They succeed, they fail but the whole process is real fun. I invite you to be part of it
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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