RE:The Internal Natural Rhythm Of A Stock In Motionstarsearcher40 wrote: Stocks have rhythms that are both natural and predictable, in a number of different scenarios. So in this scenario, here we had a stock that was totally oversold. Here's how this typically plays out.
1) At the point where selling is completely exhausted, three groups of people come in. Traders, who are looking for the upside bounce, short position convers who further the buying, and investors looking to take a long term position on the cheap. During this initial phase, these buyers collectively put a lot of upside pressure, and the stock bounces back up strongly, which is exactly what we've seen.
2) The next phase, which we're seeing today, is the short covering (buying) abating, because the short covering is now complete. So take out one group of buyers. The traders see this buying weakening, and they were only ever in for short term jollies anyway, so they stop buying and turn into sellers. So now you have two previous hard-core buying groups morph into neither buying, and one of them (the traders) actually turning into sellers.
3) Step 3, which is also today, are some dummies thinking that the stock has a problem (as opposed to just a natural internal rhythm taking place), and they become sellers too. I don't think there's too many dummies out there, but they do exist and so need to be recognized too.
4) Step four, probably in the next day or so, will be a return to the buying. The traders will see the (micro-version) of oversold, and buy in to take the next leg up. Investors will continue to buy for the longer term knowing the stock is cheap. And dummies probably won't know what to do...cuz they never do and always play it wrong.
My point is this. To think that the stock is weak, or has a problem, is vastly naive. All the stock is doing is the natural internal rhythm of a stock in motion, that was in a position of being vastly oversold. It's completely normal, and completely predictable. Having this persective and insight helps to bring greater clarity to what is really going on. I hope this helps some who might be othwise baffled or confused.
Is it natural to be the biggest loser for 2017 or just poor leadership ?