As human beings and investors, we are prone to biases in our decision making. ‘Recency bias’ clouds our minds if a recent event had caused a lot of pain – like losing money by buying or selling near a market top.
Three days of profit booking by FIIs (they can’t go on buying all the time) sent shivers down the spines of many investors. Was this the beginning of the big crash? Should they be exiting the market?
Fear impedes rational decision making. Remember the famous Gabbar Singh quote from ‘Sholay’: If you are afraid, you are as good as dead. And the one from Warren Buffett: Be greedy when others are fearful.
This post is not about being greedy or fearful about the stocks in the charts below. Please do your own analysis if you wish to buy or sell.
The stock has been trading sideways for most of the past year. It slipped into a bear market in Feb ‘14. The sharp spike in price today was caused by a ‘buy’ call from a foreign brokerage. Technical indicators remain in bearish zones.
The stock had dropped deep in a bear market to ‘penny’ status in Jul ‘13. It has recovered since then and returned to a bull market in Mar ‘14. Some recent big orders have boosted the rally. Technical indicators have corrected overbought conditions and remain bullish.
The stock had a long struggle with the bears, but has more than doubled from its Sep ‘13 low. Today’s sharp rise in price was on clarification about a frivolous allegation before the Company Law Board. Technical indicators are looking overbought and three of them are showing negative divergences by touching lower tops. Some correction or consolidation may follow.
Bears had a stranglehold on this stock. Though it has moved above its three EMAs on good volume support, the ‘golden cross’ of the 50 day EMA above the 200 day EMA is still awaited. A PE investor has bought a minority stake in a JV. Technical indicators are looking overbought. Expect some profit booking.