Revisiting an old post made back in October 2021, related to a bearish head and shoulders breakdown in Laurus Labs.
Actual breakdown is marked as in the post quoted. Another opportunity to exit (again marked on chart ) was clearly visible when stock price broke a crucial support of 435-440. ( another head and shoulders type of breakdown, though not as classical as the first one)
Prior to this bearish pattern, Laurus had gone up nearly 10 times ( in around 16 months) from levels of 70 in April 2020 to high of 723 in August 2021. With this kind of a run up, its easy to imagine that Laurus was the talk of the town, and everyone wanted to own it and many owned it too.
Typically what happens after such a sharp run up, the stock is over owned and a lot of positive news are baked into the price. There is very little possibility built in for bad news and practically none for sustained bad news. And when the real bad news start kicking in, the stock price suffers.
From levels of 589 at the first time a breakdown was hinted, back in October 2021, current price of around 338 is much lower though not alarmingly lower ( when we see stocks give up nearly 90% when bad news start flowing in). More important is the kind of opportunity costs involved. While Laurus has corrected for nearly 2 years now, a lot of other stocks have easily gone up nearly 2-3 times.
This kind of an example highlights the importance of opportunity costs.
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