There are two things that can happen after a steep rally in a stock -
1. The stock may just start trading sideways
2. The stock might succumb to aggressive profit booking
What is more interesting - When the stock pursues path (1) - it can just continue doing that for long long long long time. I made this video on TCS in July 2015: TCS trapped in a range
Now 2 years have passed and see for yourself what TCS stock has done - bouncing between 2100 and 2800 levels
TCS stock completely trapped in a range. Now that's the reason traders pursue breakout stocks compared to stocks tied in a box. Remember Reliance stock was trapped below a resistance between 2008 and 2016 and see what it is doing now once it has broken out. Here's another case study
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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