>>>>Is that why the stock dropped after gapping up on the open?<<<<
The stock dropped in response to the "buy on rumor, sell on news/fact" discipline employed by most seasoned investors who have large enough positions so that when a majority of them act in concert they are able to move the price, sometimes significantly. This strategy daily transfers large sums of money from the novice to the professional. It is important to note that this is only part of the strategy. These people also have the discipline to follow through with a reversal of their trades as soon as they determine that the panic selling (or buying) by the novice is over and the stock is ready to return to it's trend, whatever that may be. The novice, on the other hand, has neither of these disciplines and simply excacerbates his/her error by taking the opposite side of the second trade. Just as often as not the "selling on fact" establishes a mid-term high and the novice, who bought as a "momentum" player, gets the religion of Buffet, and becomes a DLTI (dedicated long term investor), who then enjoys the further insult of watching in agony, the slow bleed over several months, etc. etc.
I apologize if this is more of an answer than you expected or desired. My disclaimer is, of course, the obligatory IMHO.
Frank |
