Simple: Because the stock broke a well-defined resistance after many many years.
Datamatics stock was positioned like this on weekly chart as of Dec 09:
The chart was compelling and I did share with broader audience then
Tremendous momentum in small and mid-cap IT stocks? Why?
One stock very interesting on charts
— Deepak Singh (@smarket) December 10, 2016
When stocks breakout after years and years of struggling below resistance - they rally like crazy. In just 2 weeks - the stock is up 35%
The move is not surprising. This is the Law of Nature. Breakout is just like freeing a bird from a cage, the bird flies a distance in no time
I am sharing this example to demonstrate how stock price action works. There is nothing certain in the market. Do all patterns work out like this? Absolutely not. Some birds can fly like crazy but some might like to return back and remain in the cage. Nobody knows for sure but we all can guess human/animal behavior at some crucial points. That's the logic behind Science of stock price action
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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