Yes, that is absolutely right. News disrupts the trend. That fact
is probably why the rule is buy on rumour, sell on news. Or,
actually, sell just before news is released--if you can manage
it. At the point of news being released, the relationship between
price and volume becomes unpredictable. With blue chips, because
of the huge number of shares and the fact that other factors
enter into the price--dividends, for example--the news effect
often takes place over a longer period of time than a spec stock
where the only asset is the story. If the story isn't confirmed,
or exceeded, then the price takes a hit. (The DHK stocks, for
example). If the story is confirmed (ABZ's finding a diamond in
the drill core when the stock was around 3.50--oh happy day that
was)and better, exceeded, then the price rise can be spectacular.
I remember watching DMM stock move up a dollar a bid. In all
three cases, DHK, ABZ, DMM news broke the trend lines in
a spectacular fashion. It would be gratifying and profitable if
WSP would follow the example of both ABZ and DMM. But not DHK.
If you are sitting on 20,000 shares of a stock and it's heading
toward the moon at a dollar a bid, you're sitting there saying
to yourself, I just made another 20,000, no, 40,000, 60,000.
Of course, if you wake up one morning, turn on the screen and see
KRR drop from 15 to 2 dollars, and there's been a halt on the stock
so, even with a stop loss, your going to have breakfast out of a
bottle. |
