NUAN: An ideal study case of a "thin" stock...
First we take a quick look at the daily stock chart:
ispeculator.com
Note that the average trading volume per day is barely even 500,000 shares. Technical analysis is about the study of price and volume. The more observations, in terms of trades, the more information we have about the state of the market for any type of security. Therefore, stocks that are "thin", namely, ones that do not trade much, gives us less data points to observe. We have some thoughts about volume posted in our disclaimer and also at the bottom of our "Putting it Together" page:
ispeculator.com
Before entering into a trade, the next thing that a trader does is to look at some recent news and do some quick research. He needs to know things such as when earnings are due to be released, and stock splits, to name a few things. A quick look at the finance section of Yahoo produces news, and other important items right away:
biz.yahoo.com
biz.yahoo.com
Note in the stock profile, it shows that there is only 4.5 million shares in the public float:
biz.yahoo.com
This means that NUAN is tightly held, and/or has not had any shares released since the IPO. Therefore, going into the secondary offering, given that it was priced at $121, the underwriter would not want it to go down substantially from that number, and typically the broker will attempt to keep it around there. With such a small amount of shares in the float, and barely any trading volume, it's not a big surprise that "GS can maintain the stock price for 4 days", as you contend. This is normal operations for the firm. If you look closely at the offering document, there might even be a clause where the underwriter has received shares or the right to buy shares for less than $121, and therefore, they are earning money in open market operations as well.
By extension, this is NOT a stock to trade on a moment to moment basis. With such low volume, there are many other much better day trading candidates out there. Anyone who trades NUAN should be prepared to hold for at least a few days, in my opinion.
Teresa |
