Value Buying: Following Price Action

When a bluechip stock preferably in a strong uptrend – pulls back to a very attractive support level like 200 week moving average/Horizontal support line – then one should look at the stock as Value Buy Opportunity. The whole idea: There is margin of safety as you are buying close to support and if stock slips below that solid support, then one can assume that there is something fundamentally wrong with the company and one should exit then. But if that’s not the case – then you are buying at absolute rock bottom prices. Hence, Big rewards if you get it right

Let me share one success story: Apple stock

Apple stock back in May 2016 was down and out. It was a pullback – buying opportunity in a bluechip stock

Apple Stock at Horizontal Support Level in May 2016

Why Apple stock can bounce from current levels…the stock is at solid support levels pic.twitter.com/8khPxXhRE6

— Deepak Singh (@smarket) May 3, 2016

As if this was not enough – Apple stock reached another support level of 200-week ma few days later

Apple is at 200 week moving average NOW – The Utlimate Support level pic.twitter.com/c9ujiMkwiz

— Deepak Singh (@smarket) May 13, 2016

Just see what Apple stock has done from those support levels (200 week ma + Horizontal support level) – It’s back to the old high

Apple stock has rallied 90% from the support levels. That’s HUUGE for a large-cap stock over last 17 months. That’s how rewarding Value buying can be..

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