Reading Price Action is all about reading price moves and then investigating fundamental reasons to find out if this is for real...

The real issue...have an open mind of why something is happening

It helps you discover great ideas very early
Let me share some examples:
During last week of March, US Secretary of State Pompeo tweeted about his phone conversation with Indian Foreign Minister and reconfig of Pharma Supply Chain

It started the bull market in Pharma. I covered it as a Buy
When Pharma/Chemical became the theme, then all you had to look out for a breakout

IOL Chemicals at 265 now at 773
Granules at 155 now at 369
Glenmark Pharma at 315 now at 493
Balaji Amines at 500 now at 873
Alembic Pharma APLL at 740 now at 943
Solara Activa at 780 now at 1003
Then the Covid crisis created Opportunity in the Diagnostic space. I talked about picking

Metropolis Healthcare 1200 now at 1935
Lalpath Labs at 1400 now at 1960
Then I talked about a new trend:
Domestic Manufacturing for Domestic Consumption

Amber at 1050 now at 2018
Dixon at 5040 now at 9986
Polymed at 270 now at 490
This is not a hindsight analysis...every recommendation was backed with explanation when it emerged back then

It's not about getting it right. It's about helping people with the process of reading price action.

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More from @smarket

21 Sep
Lots of people do not understand dividend growth investing. It does not mean investing in a stock that gives you a high dividend yield. Actually, doing that leads to more destruction of wealth.
Dividend Growth investing is positioning for high yield income in the future. Example:

You buy a strong company that's available at a 3% dividend yield right now. But has a track record of increasing dividends and is a growth story, not a dead business
Two components

Dividend Payout ratio i.e. How much profit is distributed as dividend [Example: 40%. If it makes a profit of $1, it gives 40 cents as dividend] It means management has headroom to increase the payout

Profit Growth: As profit grows, same payout means more dividend
Read 5 tweets
18 Sep
Bullish theme:

Digitization - Data and Digital properties

Distributed Supply Chain means more market share for Indian Pharma Supply Chain and Chemical companies faciliatetd by
Anti China sentiment and Atmanirbhar Policy (domestic manufacturing for domestic consumption)
Accelerated Digitization of Global companies to drive big deals for Indian Tech companies and Remote working to drive high margin offshoring which can be done in Tier 2 Tier 3 town. It means low-cost scaling. It's a structural reset for Indian IT companies
No wonder there has been a big bull market in
Specialty Chemicals
Read 5 tweets
9 Sep
My view on Tesla:

1. Tesla made a big bull run precovid when it rallied to 190
2. Covid crash pulled the stock down, no fault of Tesla and the stock pulled back to 50-week ma of 80
3. Covid recovery happened and this stock rallied early and broke out above > 190 Image
Tesla stock took a leadership position and rallied from 200 to 340. It was an insane rally.
The stock then went quiet and the board announced a stock split on August 11 and the stock made another insane move from 275 to 500
Now there is nothing left to price in Image
Tesla is now the top 20 most valuable company in the world
Every stock witnesses an insane momentum and once the momentum fizzles out, it becomes a difficult volatile stock to trade.

Nobody knows the trajectory now. It can bounce from here at 50 dma or sell off to 275
Read 4 tweets
24 Aug
The market always makes sense in hindsight. Let me share why the market has been crazy about Tesla since Nov 2019.

Once upon a time i.e. before Oct 2019: Tesla was known for missing delivery targets, production milestones. Musk was never considered good at managing expectations
Tesla's factory in Shanghai changed that perception for good. That was the biggest shock element for the market which was extremely bearish on Tesla. There were people who had bet everything that Tesla would go down to zero.

The world turned upside down
Stock Price movement is a function of how people are positioned in the stock which usually reflects expectations and when that change...the price movement is dramatic.

Breakout to new high is the starting point of a new journey Image
Read 5 tweets
15 Aug
The stock market is not a mirror image of the economy. So, please do not flash your low intellect by making statements like the stock market is disconnected from reality.

You have no idea then what the stock market does.
The stock market is a discounting engine. It looks at the current economic situation and then visualizes a new economic landscape and picks winners and losers. At this point in time, the only thing that matters - What the market believes the future will be. It's only belief
When the covid crisis started, the market quickly visualized that people will work from home and companies will under pressure to digitize to be in business and hence all those stocks rallied. The market started discounting accelerated Digitization growth. Was that disconnected
Read 7 tweets
9 Jul
Laws of the market:

1. Every year the market falls in love with one particular stock and then it just takes it to the moon. Such stocks before making the move offer multiple opportunities.

2. You cannot stop an idea whose time has come.

Case Study: IOL Chemicals and Products
IOL Chemicals and Products

Breakout in Feb but covid happened and the stock made a quick 50% move before collapsing… Image
A good idea can get disrupted due to market turbulence but then it does make a comeback.

IOL CP offered another opportunity at 262...the real move this at 627… Image
Read 5 tweets

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