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Strategies & Market Trends : Trader J's Inner Circle -- Ignore unavailable to you. Want to Upgrade?

To: Canuck Dave who wrote (14921)	5/20/1999 5:04:00 PM
From: Trader J	Read Replies (1) \| Respond to of 56535

CD: I myself do not put a lot of weight into analyst picks but they can add a certain level of confidence to an issue and they do have money behind them. Many play recommends solely as their way to pick stocks and many other smaller houses will ride the coat tails of the majors by initiating. I love to play beaten up issues that continue to get slaughtered after coverage. How about a "Junior Traders Badge" instead? J

To: Canuck Dave who wrote (14921)	5/20/1999 5:23:00 PM
From: StockHawk	Read Replies (1) \| Respond to of 56535

>>I don't trust analyst's picks or target prices. How do other people feel?<< I did a very non-scientific study last year. I monitored price movements after significant analysts upgrades and downgrades. By significant I mean a change such as from "accumulate" to "strong buy" as opposed to going from "accumulate" to "outperform". This is what I found: If an analysts recommendation was not a response to a significant event then the stock would have a short term move and then fall back. So it made sense in these cases to do the opposite of what the analysts recommended. Example, if Merck was down due to a downgrade you could buy and likely sell in two days for a profit after the stock recovered from the news. On the other hand, if the recommendation was issued in close proximity to a significant event, then the stock tended to move in the direction of the analysts recommendation for several days (especially on the down side). So if Merck missed earnings and then got downgraded it was wise to short as the stock would continue down. Naturally, the mood/condition of the market has a lot to do with this, and I was looking at situations where just one analysts issued a recommendation. StockHawk