Tuesday, August 26, 2014

Buy On Dips Says Bull Market




             Since this February we are in uptrend and almost every stock is running upside with a rocket speed. So we all know that we are in Bull market, but no one stock run continuously every day or week or month in same direction and must corrects.

            The above chart is of Adaniports which is also in an uptrend since February and gain almost 70% in last 5 months. But it does not run continuously and corrects every time after a consecutive rally. The first dip came on 23rd April and ends on 5th of May, where the stock corrects almost 8%, and then resumes its uptrend again. The second dip came on 21st May and ends at 29th May and stock corrects almost 11%.

          Generally, these dips are the perfect opportunity to join the rally when we clearly know that trend is up and should forget to short sell in a bull market. Adaniports is still running up, trading at its 52-week high and breakout again from its previous resistance on Wednesday.

1 comment:

SantoshG said...

I am your big fan, really love your style of analyzing the markets. Thank you for your wise words on CNBC!

I have a question... RE: two different chart patterns... in the context of this bull market

There are 2 chart patterns i like to trade... One is stocks breaking out of long basing formation- there are a few variations here
1. making double bottoms
2. forming a higher low on monthly charts
3. inverted H&S
4. Down trend line breakouts

(Yes, my portfolio trades are based on Monthly charts with time horizon of 5 years)

Second pattern i have picked up for my portfolio picks and which has returned very handsome gains is buying life time highs on Monthly charts.

My question is- Breakouts from basing formation of fallen angels has given relatively low returns in last 6 months in some cases even negative returns where as other pattern of life time high has given very handsome returns in some cases even multibagger returns. I am holding both and thinking of exiting the ones bought after basing since they are relatively poor performers so I can allocate that money to performers... is this a correct thinking???? PLEASE help.