[ad_1]
As penny stocks have less correlation with the broader markets, owing to their extreme volatility and low volume, one stock that is screaming easy money in the midst of a tough market condition is Oil Country Tubular Ltd (NS:).
It is a micro-cap company that manufactures and sells drill pipes and allied products and has a market capitalization of only INR 65 crores. It’s irrelevant to talk about the fundamentals of such a small company and penny stocks should only be meant for short-term trading not long-term investing.
Image Description: Daily chart of Oil Country Tubular with volume bars at the bottom
Image Source: Investing.com
On the technical front, the stock has delivered a massive trendline breakout in today’s session as it surged to the highest level in one month. It sliced through the trendline with its 9.76% rally to INR 16.3 on the back of a heavy volume of 80.9K shares. This might not seem much but penny stocks generally clock a very low volume and in relative comparison, the figure is a good one. In fact, this is 450% higher than the 10-day average volume of 14.6K shares. Also, as the stock is locked in at the upper circuit limit, the pending buy orders of around 19K aren’t able to materialize into the traded volume which would have further increased the volume figure.
The breakout backed by a healthy volume figure is clearly reversing the trend of the security but as this is a penny stock, traders are recommended not to hold it for a long term and exit before the momentum fades. On the upside, there is good potential for the stock to rally to the next hurdle of INR 18.5, translating into a decent gain of 13.5% from the CMP.
Another interesting thing that happened on the daily chart is that the stock also surged past the upper band of the Bollinger Bands® indicator which is clearly depicting the volatility breakout. So essentially, the current up move is backed by both the volume and volatility expansion and therefore the reliability of the impending upside becomes high.
As this is an extremely volatile stock, traders should be nimble enough to exit in case the stock takes a U-turn. A closing below INR 14 will negate the implications of the current trendline breakout.
Read More: Opinion: Extended Timings for Equity Markets Till ‘5 PM’!
[ad_2]
Source link
(This article is generated through the syndicated feed sources, Financetin doesn’t own any part of this article)
