tamaracktop wrote: Remembert this postfroim last Monday:
tamaracktop wrote:
The volume today is likely to be significant.
If the stock trades another 200,000 shares today, it will make this session the stock's most active one going all the way back to June 2nd.
On that date the stock rose 66 cents ( 20.5% ) to close at $3.88 on 953k shares traded.
If the stock closes nicely higher on the day, on the biggest volume in months, then you will have seen an upside reversal off a low that will likely support a short-term rally at the very least.
If the stock closes on or near the day's lows, there will be little cause for optimism.
If it closes relatively unchanged, it's indeterminate.
I wouldn't even hazzard to guess where it closes today.
I don't have the slightest idea.
Noone does.
While the stock did indeed trade record volume by recent historical volumes last Monday, it closed unchanged. The day was "indeterminant".
Not so yesterday.
A 23% reversal of a new low to close up 15% is bound to attract the attention of technicians and momentum players.
At 180,000 shares traded, volume in the US was a 4-month high.
This is very likely enough of an "event" to support a short-term rally, but with two caveats.
Firstly, it would have been far more bullish is the stock had closed at or near the day high.
Everyone has heard the expressions "buy the dip" and "sell the rally".
This stock hasn't "dipped", it's dumped.
A close closer to, or at, the high would have done more to allay fears that this was more than a
dead-cat bounce.
The second mitigating factor was the VWAP.
The VWAP yesterday was $1.04834
The VWAP on Thursday was $1.0324
For those that don't know, the VWAP is the volume-weighted average price. This is a measure that some feel paints a more accurate picture by accounting for the number of shares that trade at each price during the day.
It "alleviates" distortions in perception that may result from heavilly skewed volumes
I'll give you a purely hypothetical example to illustrate.
Imagine an illiquid penny stock with a big spread. The stock is $0.90 BID and offered at $1.10.
The stock trades 9500 shares during the day at $0.90, down 10%, and closes at $1.10 on a trade of 500 shares, up $10%.
People looking at the closing price only will have a "distorted" perception of the trading.
The VWAP that day would be $0.91.
Incidentally, on Wall Street the practice of putting in a trade at the close to make sure that the stock closes at the offer is known as "painting the tape".
Having said that, yesterday was unquestionably a good day for the bulls.
I'm sure you'll all enjoy your weekend far more than you would have if this had closed in the ninetees.
Enjoy it.