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Science of Stock Price Action:
When a stock creates Gap-up enthusiasm, then never ignore that stock when it comes back to fill the Gap
Gap-up enthusiasm - Any fundamental news flow that changes the mood/sentiment around the stock and stock opens at a price much higher than previous day high price.
Example: Reliance stock created Gap-up enthusiasm in October 2015 after strong earnings report
Gap Filling and Rally
The base of the Gap became the Base for the stock
Reliance stock post gap-up came down to fill the Gap around 910-920 in last 12 months and all turned out to be an excellent opportunity to Go Long. Reliance stock delivered decent trading gains on its rally from 910-920 to 1070-1120
Reliance is still a trading stock. It will become investment stock only when it clear 1150
Reliance has not crossed resistance of 1150 since June 2008 pic.twitter.com/njsbmvfdTR
— Deepak Singh (@smarket) December 13, 2016
THINK Again - What Lesson have you learnt?
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