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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: Roman S. who wrote (1908)4/15/1999 11:54:00 PM
From: Tai Jin  Read Replies (1) of 2120
 
I think in certain stocks the perceived value has nothing to do with the current price. These stocks are driven by momentum traders. No one in their right mind thinks that NTBK was worth $250, yet the price got there because of momentum trading. People tend to think of price movement rather than absolute price. So if they see the price going up they think it's going to continue and they pile in driving the price higher. They have no idea what the price should be, but they hope it will go much higher. In the end, when the momentum is gone, the price should return to its perceived value which may be more in line with its fundamental value.

...tai
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