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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: Ken Wolff who wrote (433)2/1/1998 8:15:00 PM
From: Tom Hua  Read Replies (1) of 2120
 
Ken, I can't say with certainty that the following scenario is a high percentage repeating pattern but I have noticed that when a stock jumps (>20%) in response to a buyout rumor , it will likely drop back to the pre-rumor level within a week or two. Reason is obvious, more often than not, the rumor just doesn't pan out, or there's no public confirmation by either party within the 1-2 week time frame. One of such cases occured 1 1/2 hours before the close on Friday, and stock leaped 20%. I plan to trade it tomorrow, may go long first, watch it like a hawk, and switch to short for the descend.

Regards,

Tom

PS: To honor this thread's philosophy of not discussing individual stock, I've withheld naming the stock, although I'm sure all of you know it.
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