Trading on Analyst Recommendations

Discussion in 'Professional Trading' started by galevin, Apr 20, 2008.

  1. galevin

    galevin

    I subscribe to TradeTheNews, FlyontheWall, DowJones newswire, etc and I've been pretty successful trading on the news. I may be in a trade for a couple minutes or a few hours depending on the news and trying to figure out analyst recommendations.

    I know all about how many analysts can't say what they really want to say or how they make a recommendation based on what their firm wants them to say. Many times their ratings are very biased and their buy rec means they want you to buy so they can then dump on you. I'm familiar with all this.

    What I'm curious about is how can we get a better reading on the analyst recommendation so we can get serious with a large immediate buy or pass on it knowing it is a headfake.

    A few examples:
    1. Last week Deusche Bank came out with an upgrade from hold to buy on a stock (can't remember the name) and it jumped almost 10% over the course of the day when that particular day the market was flat. Made some money on this trade but got out way too early.
    2. Just last Friday MSCO came out with a downgrade from hold to sell on LAD. The stock was down about 4% at the time but that stock would not go down at all. In fact it went up after the sell recommendation (probably insiders buying to prop up the price). Now this was when the market was pretty hot but I would have thought this would have brought down this stock some. Lost on this trade and can't figure out how this pos stock went up after a sell rec by MSCO.
    3. CitronResearch. They are independent and usually short a stock first and then release by pr a very negative article on how they think a particular stock is not only a sell but also a scam. When I see these pr's I immediately short and make a killing.

    Anyone know how I can fine tune the downgrade/upgrades so I know what is going to make me $$$$ and what is unadulterated bullshit? There has to rating sites on consistency among analysts or forums that discuss this.

    I've been investing 20 years and prefer to trade intraday and not hold in this market and trading on the news has worked very well so far. Any help greatly appreciated.