The BIST 30 Index, which includes the most prominent companies on the Borsa Istanbul, serves as a crucial guide for investors trying to understand market trends. But what does the distance of these companies’ stock prices from their lowest and highest levels tell us? If a stock is close to its dip price, does it present a buying opportunity, or does it carry the risk of further decline? Do peak prices indicate a strong market trend, or are they a sign of a potential correction?

What is the BIST 30 Index?

BIST 30 represents the performance of the 30 largest and most actively traded companies on Borsa Istanbul. These are the “big players” of the market. Since these companies are typically leaders in their industries, they are often seen as reliable investment choices. Investors frequently refer to this index to understand market trends and build strong investment strategies.

What is the Purpose of Dip-Peak Analysis?

Dip-peak analysis examines a stock’s lowest and highest prices over a specific period, helping investors determine how close the current price is to these levels. This addresses common investor questions such as, “This stock has dropped a lot—should I buy it now?” or “It has reached a peak—should I sell?” By identifying overbought or oversold conditions, this analysis enables more informed buying and selling decisions.

Based on this perspective, we analyzed the past 200 days of price movements for BIST 30 companies. We examined the distance from dip and peak levels, analyzed the time required to reach these levels, and calculated the peak/dip ratio to assess the volatility of price movements.

How Close Are We to the Dip?

The dip price is the lowest price a stock has reached in the last 200 days. On average, BIST 30 stocks are trading 17.2% above their dip level. However, not all stocks follow the same trend—some stocks are almost sticking to their dip level (0.48% away), while others are 60% above it. Stocks close to their dip levels are generally considered buying opportunities, as the risk of further decline may have diminished.

How Close Are We to the Peak?

The peak price is the highest level a stock has reached in the last 200 days. On average, stocks are trading 13.85% below their peak. This suggests that most companies could retest their peaks, but some may take longer to recover. Stocks near their peak levels often experience increased selling pressure, though they may also indicate strong momentum.

Where Are We Between the Peak and Dip?

This ratio indicates how wide a stock’s price movements are between its highest and lowest levels. For BIST 30 stocks, this ratio is 1.38 on average. A low ratio indicates more stable price movements, while a high ratio suggests a more volatile market. Stocks with a peak/dip ratio close to 2 may be attractive for risk-taking investors, whereas lower-ratio stocks are often preferred by more cautious investors.

Investment Roadmap with Dip-Peak Analysis

• Stocks close to their dip levels may offer an opportunity for investors seeking to buy at a reasonable cost.
• Stocks near their peak may experience selling pressure, making it a suitable time for profit-taking.
• The peak/dip ratio can help investors choose stocks according to their risk appetite. Higher ratios may offer short-term gains, while lower ratios are more suitable for long-term stability.

Interpreting Market Trends

This analysis can also provide insights into overall market sentiment. If most companies are near their dip levels, the market might be oversold and poised for a rebound. Conversely, if most companies are near their peaks, the market could be overbought and at risk of a correction.

In conclusion, dip-peak analysis is a crucial tool for shaping investment decisions and managing risks. However, it should not replace other forms of analysis. Every investor looking to stay ahead in the market must incorporate both fundamental and technical analysis. The key is to determine which analysis to prioritize based on the market, sector, and timing.

Legal Disclaimer: This article has been prepared by SMART AND START SMART FINANCIAL SOLUTIONS AND MANAGEMENT CONSULTING INC. for informational purposes only and does not constitute investment advice. We recommend consulting a professional advisor before making any investment decisions.