| When the market is a bit funky, it is
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| | down a 1/2 for a week or two. But in
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| obvious that the last thing you want to
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| | todays market, CEO's and CFO's can't
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| do is release bad news, but the rules are
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| | afford to have their stock just sitting
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| the rules and when someone announces they
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| | because shareholders are so well informed
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| have missed earnings or revenues the
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| | and so interested. (shareholders are very
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| punishment is quick and severe. But its
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| | quick to start lawsuits today) So the
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| usually overdone! For instance is it
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| | company will generally go out of its way
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| right to cut a stock in half when the
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| | to release "good" news in hopes of
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| worst thing they said is that sales were
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| | getting the stock back in favor.
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| off by 10%? More times than not the
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| | Sometimes it works, and sometimes it
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| market overreacts to everything and this
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| | doesn't but it rarely causes any
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| can be a great buying opportunity for
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| | additional selling, so buying these
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| you. If you see enough charts for enough
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| | "bottom dwellers" is generally pretty
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| years it is quite clear that the initial
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| | safe. If the company was doing well
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| reaction to a bad news report is often
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| | before it released its "poor numbers", it
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| overdone and the stock pops back a bit on
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| | will often pick up about half of what
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| a rebound. This is called a "dead cat
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| | they originally lost in a matter of a few
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| bounce" in market language. But what we
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| | more weeks.
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| are focusing on isn't really a dead cat
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| | So watch for these "big slams" and jot
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| bounce, its bottom fishing and that is a
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| | them down. If you are really fast, you
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| bit different.
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| | can day trade the "dead cat bounce", but
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| Here is the scenario: A company
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| | if you are a position player, ignore the
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| announces that they beat estimates but
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| | bounce, and wait for the "settle in".
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| revenues were a bit soft. That causes a
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| | Once its clear that the bulk of the
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| huge panic and they sell off the stock in
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| | selling is gone and the stock has
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| a big way. So a stock that was 30 on
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| | bottomed, taking a nibble is often a good
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| Tuesday morning closes at 18 that night!
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| | way to pick up a few points. One
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| Then Wed. comes and it pops back up a bit
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| | important note here is that you MUST wait
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| (the dead cat bounce), maybe getting to
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| | for at least 3 to 5 trading days after it
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| 21 or so. But very often that dead cat
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| | seems to have "bottomed". You have to be
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| bounce is met with some more selling as
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| | sure the bottom is really set, or you can
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| the market moves on to slaughter some
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| | get trapped in a bounce. Another good
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| other poor company. Finally the stock
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| | idea is to do this type of bottom fishing
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| settles in somewhere around 20 dollars
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| | on good, well known companies. Don't try
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| and sits there for quite a while. This is
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| | this on the "blah blah" company, because
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| where it gets interesting to watch it. A
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| | they may never come back. But when a
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| lot of times that thing will sit and
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| | leading tech stumbles, its often just a
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| crawl along that 20 dollar line for a
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| | gift to us! So watch for these
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| long time, just wiggling up a 1/2 and
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| | opportunities, they can pay off big.
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