Ken, you are very right. Perceived value is what the daily market fluctuations are made up of. News releases, upgrades, downgrades, mergers, aquisitions, all these items help add to the daily soap opera that we ourselves are the characters on the screen. We make a choice whether to buy ABC or short XYZ, or buy options on JKL 3 months out. It is very good to screen the news, but you have to be careful about overenthusiasm and getting caught up in a fast updraft that ends abruptly and starts going the other direction. Happened to me yesterday on MHMY. Got caught in the rush at 9 and it was down from there. If I waited for the first pullback, could've gotten in below 8 1/2 and out above 9 within 10 mins and been done for the day. Instead I had to sit it out in front of my monitor watching for the type of close it was going to have and decide whether to hold it overnight. I held and sold out at $10. Could've/should've had $11 but my brokers website had a glitch and my sell didn't go through. Got on the automated phone system and entered my order that way, instead of waiting for a live person (which would take way too long). Lucky I got out with a profit instead of taking a loss by the end of the day. The way I figure out when to hold, is if volume has been extremely high for the particular stock, and it is still closing at or above it's open price which should be a gap up from the previous close. And an additional criteria which sometimes applies is what my average price is in respect to the close. If I see a steady close with no selloff or rise, I'll usually average down at that time, and that helps me get above my average price quicker and realize a gain. Look at the chart of ELCO for today. I'm in at 5 15/16 and took it home. The news plus all the extra volume with big block buys that I saw, helped me make up my mind by 3pm est to take it home and figure it opens about 6 1/4 or better, that being a conservative estimate.
Sorry for being long winded, but if you want to learn, you have to read, read, read, comprehend, then go read some more. And something I read awhile back, but not sure where : "The most important thing to know is when to do nothing." |
