Bottom Reversal: Investors Capitalizing on this Stock Gains 5%!
It is difficult to find strong stocks in such a weak market. However, this is the time that separates the from the chaff and these outperformers eventually become good candidates for a better move when the storm passes by.
Symphony Limited (NS:) is one company that is gaining traction today. Investors seem to be fleeing to buy Symphony shares and it’s looking to be proving a good counter for them. The company is a small-cap manufacturer of home electronics and appliances and is famous for its air coolers in both domestic and international markets.
Image Description: Daily chart of Symphony with volume bars at the bottom
Image Source: Investing.com
The share price of Symphony soared over 6.35% to the day’s high of INR 889 in today’s session so far, on the back of a volume spike of 305.2K shares. It is the highest one-day volume since 4 May 2022 which depicts investors’ confidence in this counter and more interestingly this confidence is coming in when investors are making an exit from the market over the fears of a global recession.
Today the stock took support from around the same levels from where it halted its fall in June 2022. That means the stock is forming a double bottom reversal chart pattern which is known to reverse a prior downtrend to an up trend. This pattern provides a very low-risk entry to long holders if they decide to enter even before the breakout of this formation, which gives the actual confirmation of the reversal. But till that, a good chunk of the move also gets missed, as the stock has to rally to around INR 975 (in the case of Symphony) just to complete the pattern and confirm the reversal. That’s a good move of around 12% from the CMP of INR 866.
Hence, it is a trade-off for investors whether they want to make a premature entry for a potentially higher reward or wait for confirmation and minimize the risk.
Zooming out a bit, it would be noticed that the zone of around INR 825, from where the stock has taken support has also worked significantly well more than a year ago. This level has proven to be a very strong buying zone from August 2020 to December 2020. Hence the probability of this level working again is quite high. However, if the stock falls below INR 825, preferably on a closing basis then it would negate the current double bottom formation.
It is difficult to find strong stocks in such a weak market. However, this is the time that separates the from the chaff and these outperformers eventually become good candidates for a better move when the storm passes by.
Symphony Limited (NS:) is one company that is gaining traction today. Investors seem to be fleeing to buy Symphony shares and it’s looking to be proving a good counter for them. The company is a small-cap manufacturer of home electronics and appliances and is famous for its air coolers in both domestic and international markets.
Image Description: Daily chart of Symphony with volume bars at the bottom
Image Source: Investing.com
The share price of Symphony soared over 6.35% to the day’s high of INR 889 in today’s session so far, on the back of a volume spike of 305.2K shares. It is the highest one-day volume since 4 May 2022 which depicts investors’ confidence in this counter and more interestingly this confidence is coming in when investors are making an exit from the market over the fears of a global recession.
Today the stock took support from around the same levels from where it halted its fall in June 2022. That means the stock is forming a double bottom reversal chart pattern which is known to reverse a prior downtrend to an up trend. This pattern provides a very low-risk entry to long holders if they decide to enter even before the breakout of this formation, which gives the actual confirmation of the reversal. But till that, a good chunk of the move also gets missed, as the stock has to rally to around INR 975 (in the case of Symphony) just to complete the pattern and confirm the reversal. That’s a good move of around 12% from the CMP of INR 866.
Hence, it is a trade-off for investors whether they want to make a premature entry for a potentially higher reward or wait for confirmation and minimize the risk.
Zooming out a bit, it would be noticed that the zone of around INR 825, from where the stock has taken support has also worked significantly well more than a year ago. This level has proven to be a very strong buying zone from August 2020 to December 2020. Hence the probability of this level working again is quite high. However, if the stock falls below INR 825, preferably on a closing basis then it would negate the current double bottom formation.