Glaxo: In treacherous waters

K Seshadri

It is time to book profit at Glaxo. The scrip opened at Rs 525 and closed Rs 10 lower. The reaction has already set in. However I must point out that the stochastic indicator has not yet signalled a sell. On the daily chart it has reached the overbought level. But it is quite common for scrips to stay in the overbought level for some time.

In the case of Glaxo this is even more relevant, as bulls who took the scrip would not let it come down as quickly, until they have slowly distributed their gains. A quick drop would spoil their game. So they are likely to hold up the price for some more time, and may even trap short sellers. On the other hand, the price has formed what is called `Dark Cloud Cover' which is bearish. So if you have the nerve and patience to wait out, short sell. In any case book profit. Do it at the upper end though. Most importantly be watchful of a low opening, in which case the price can surge back!

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