Hardrocker,
I'd be careful with circumstances like you describe for WND. Take a look at AFCI. It did a similar swan dive on 7/1/98 to 16 3/4 and subsequently bounced up to over 28, but then continued to drop. Friday, it closed at 7 and change. I was in ASND when it plunged down to 22 1/2. Bought every "pause" on the way down. WRONG!
Most of these sudden drops have a "dead cat bounce" where the bargain hunters pounce. If you're nimble, you can scalp a few points, but trouble is trouble. Eventually, the stocks either continue to drop or just go comatose (like another of my "winners", CREAF) and become "dead money".
Buying a stock that is dropping because it is in trouble is called, "catching a falling knife." Unless you have correctly identified true bottom, you get cut.
From TA standpoint, OnBalance Volume and Cumulative Volume both look like spilled paint running off a table. Money pouring out of the stock. On both weekly and daily charts, stochastics are about at zero. Yep, oversold, but perhaps for a reason. (The only lower day in a long time was 12/1/95 where it hit 5 3/4, so you could say it has reached "support".) Since it both opened and closed in the upper part of the day's range on Friday, the odds are decent that Monday will be an up day if you want to scalp a little.
Overall, I'd recommend waiting to see signs of solid bottom and a beginning recovery before entering a weak stock for a longer hold. Otherwise, you could be waiting a long time before getting even on your money. Better to put your money into a healthy company coming out of a short term setback and clearly on the mend. |
