Market Monitor
- After two days of red hot momentum, market had a rest day yesterday.
- There is action on both side currently. There were stellar blowout moves on over 35 stocks . There were some nasty reversals also.
- The kind of action we saw yesterday is normal action after few days of excellent momentum. Short term players take their profit, overextended stocks reverse. This sets up for further gains as earlier gains are digested.
- Dip buyers will be active in the market and we should see further upside fueled by cash on the sideline.
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5 comments:
Pradeep,
Would like to know your thoughts on dip buying? Is it a good idea to buy a share which has declined even though the company looks sound. For e.g. in UK, Northern rock has lost 80% of its value but the company looks sound. It is backed by the treasury. So does that make it a good buy?
That is not dip buying. Dip buying is when a stock is going up and it goes down by small amount say 10%.
Norther Rock deposits have been backed by UK Treasury, not the company. The company is going bankrupt. So buying it here, you will lose all your money. It is a sinking rock.
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2500694.ece
This explains what is likely to happen next in Norther Rock case.
Thanks Pradeep. Have a look at this http://business.timesonline.co.uk/tol/business/markets/article2503935.ece. He must be really brave to buy shares in the company.
Northern Rock for all practical purpose has been nationalized by UK Govt. Shareholders will not get anything out of it. It will be closed or auctioned off. So when it is auctioned off large shareholders may demand it be auctioned off at higher price. That kind of game is for very large investors.
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