Can someone explain this

Discussion in 'Trading' started by 2yearNewbie, Nov 13, 2003.

  1. Ok a stock has just been downgraded or had poor earnings. It opens up lets say one point lower. It goes down another 40 or 50cents; then for the rest of the day it proceeds to go higher and higher until it breaks its opening price , then it keeps going to its almost unch on the day.
    Now the question is who is buying, especially if the stock is only 3 or 4 points away from its recent highs (meainging probably not too many shorts involved) ? Has anyone worked on the exchange floor and seen this?? I am just curious as to why this happens. And since it seems to happen alot these days, why doesn't the seller just wait and let the stock open unch or relatively flat
  2. cvds16


    a big assumption here, maybe all the shorts were just waiting for the bad news and the reason the stock got up in the first place was shortcovering.
  3. Generally, markets anticipate what is expected to happen in the future. After "what is expected" occurs, traders then cover their positions.

    Traders will buy on rumor of good news, then sell after the release of the good news. Or, traders will sell on rumor of bad news, then cover their short positions after release of the bad news.

    Just one of those strange characteristics of the markets.

  4. ===
    [1]Lot depends upon what price players got in on, much earlier.

    [2]Rising tide tends to lift all boats;
    however that kind of boat can go down , keep going down superquick with ones money also .


    [3]Not all players buy low;
    William o' Neill does real well ,under certain conditions,
    and some institutions buy high , sell higher.

    Love learning - Solomon, trader king