There is a very simple trading rule: One should Avoid stocks which exhibit no trend because such stocks will make some random moves from time to time but then again come back in its comfort zone.
Let's take one example: Wipro
This is Wipro stock chart between June 2015 and Jan 2016
Can you see any trend in the stock? Most of the times it's frustrating to hold such stock. The charts give you an idea of what's happening in the stock. Now let's see last six months - has anything changed?
Nope. The stock once made a sharp move from 550 to 600 in 5 days but then surrendered those gains in following 5 days. The stock was back in the comfort zone with no ultimate gains for the investors in the stock. That's what trendless stocks do. Wipro stock chart is a great example of why one should always look at the chart to get big picture understanding of what's happening to the stock
This song captures the state of trendless stocks
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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