Secondary Offering Question

Discussion in 'Trading' started by NY_HOOD, Sep 21, 2007.

  1. why do stocks go down on a secondart but sometimes they go up as well. look at JASO today. i am a bit confused.
  2. It really depends on the type of secondary. All "dillute" the ownership, but the kind that offer a preferred or convertible type security tend to hold value that is more than equal to the amount of capital infusion. If you have 100 people and 10,000 dollars or 200 people and 20,000 dollars that should be equal value, but the alternative issues sometimes give preferential treatment, and/or rights or even interest debt.

  3. People might not act logically. Price values might not behave logically.

    Something important may be happening that you do not know about or is not published in any news report.

    I am always more interested in the effect that news has on price (if there really is such a relationship) than the news itself. reports Ja Solar Holdings Co Ltd. as a Chinese company. Chinese companies may be unaudited, the Chinese regulatory authority may be corrupt or nonexistent, news and financial results phony. Stock prices may be manipulated.
  4. this is just like a good earning report, a bad bearish market, or a bad report and a bullish market.

    ignore those news and its contents, you do not need them!

    just FOCUS ON what the market is doing, if going down, go SHORT, if going UP, go LONG. that is it.

    thouands of reasons a stock will go up, or thousnads of reasons a stock will go down.
  5. jumper


    like don said, secondaries are dilutive and in most cases, they will force the stock to trade lower. in many cases, there are flippers who sell the allocated shares throughout the day to lock in a profit or get stopped out.

    important points:
    -when secs are announced, they will go lower. when they are actually priced, they can go higher because the dilution is already factored in and/or overdone. or if they catch a fund that was looking to enter into a sizeable position. that is an ideal situation for a fund because they get off size and they can usually get it at a discount.
    -watch for levels of support that are usually at the level where it was priced or at the next even level.
    -an issue that goes higher the day of/after the pricing usually extend it's gain through out the day.
    -once the flippers are out, the shortsellers will have to cover since they can't take the secs to cover short positions.
    -you can treat these secs as a clean up trade.
    -just pay some attention to who and why the sec was offered. it can reveal some useful info