One easy way to figure out the sector to bet on is to look for stocks/sectors where new 52 week or preferably all time highs are made esp during bear markets and due to the bear market stocks correct and are consolidating at some level.
Few stocks that come to mind are kabra extrusion (all time high), praj inds (52 week high), good luck steels (all time high) , Jagran (made a new 52 week high today amidst correction), etc. All these stocks made their respective all time or 52 weeks highs and are now consolidating near to their support levels. One of the important support levels in case of stocks which have taken out their earlier all time highs (or usually multi year highs) is in the vicinity of the earlier highs. e.g Kabra extrusion is a stock which had posted its all time high of 103.40 in 2010 underwent sharp correction and after many years broke past the level of 103.40 and posted a new high of 119 in Sep 2015. Now stock has started cosolidating closer to its 50 day moving avg. On panic days it might try to get support at around its 200 day moving avg. These are classical supports described. There could be other ways to detect support levels like retracement levels etc but those would be too complicated. To me what this chart is trying to tell me is that after many years there is likely to be a change in the fortunes of this company for the better. (how it pans out needs to be seen but this could be an example which could be observed and something can be learned out of it.)
I read this philosophy in two books … one in Basant Maheshwari’s The Thoughtful Investor and other in Ivanov’s The Next Apple.
This should not be construed as any recommendation but as a tool to try and find out possible winners.
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