Science of Stock Price Action: Panic is Good. Sometimes, it offers great opportunity in strong stocks.
Let me share one illustration: Costco
I am a big fan of Costco Wholesale store. It has a simple wholesale business. It attracts customers like crazy. Here are two tweets that sum up Costco business
Costco membership renewals: 90%....incredible. It just shows how much the consumers value it
— Deepak Singh (@smarket) November 30, 2016
— Deepak Singh (@smarket) April 9, 2017
Now recent Amazon buying Whole Foods news created panic in Retail stocks and every stock collapsed under the fear of new disruption. But if you have been to Costco store, you can make out that it has nothing to worry.
Here's Costco stock Chart
As you can see in the chart above - Costco seems to have strong support at 200 dma. The current decline looks like a great Buying Oppty. We will review the stock few weeks/months later
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