There's something I don't understand here. I'm new to trading in penny land, but I've been trading on Nasdaq and TSX for long.
Here's my question:
This week, most of my picks (stock I own) had good (some very good) press releases...and they are almost all down (some way down).
I've heard the ¨ buy on rumours, sell on news¨ But is that really the case in penny land? All the time?
Thanks
Malloy
Fallstaff
posted
You have to be wicked quick when news hits because of 2 things. When news hits and the stock starts going up fast a lot of traders are getting out at those prices, taking their profits and when the buyers run out of steam they too start selling off. Second, the MM's also have their part in this news game, they will allow the stock to "pop" and sell a lot of shares on the way up, but later in the day they will start walking the price down, a little at a time and some (if not most) times they'll walk it below the price the stock was before the news even came out. The strategy that will succeed in this environment is one of constant scanning of the market, keeping an eye on stocks building volume and knowing how they move like the back of your hand. Knowing which MM's control the flow, where the price was and how much a stock gets manipulated. And that's just for starters.
FS ~ Trust your dd
Jeremy
posted
Yep, in penny land the "buy on rumors and sell on news" cliche will hold true more often than not. A lot of times if a stock starts to show a little life, higher than average volume, but no news is being reported, you should assume there are some rumors floating around.. thus, might be a good time to buy.
A few days later if there is a press release, you will likely see the stock rise sharply as all of these new investors jump in and the MMs let the price pop, just like Fallstaff said. Look at ADOT today.. had some good news, and in the first half hour of trading the stock was on a big roll. But soon it began walking back down to almost where it started the day.
posted