large gaps in opneing prices in the sector. https://school.stockcharts.com/doku.php?id=trading_strategies:gap_trading_strategies The opening gap is a difference in stock price between the close and open of two consecutive days. All market orders at open have to settle right at the opening price. There can be a serious price impact on the opening price if there is a big imbalance in buy and sell orders. The big change in market futures usually has a direct impact on the stock prices at open. Big price gaps create more volatility in stocks.
For a high volume stock, there are all kinds of orders at open including stop-loss orders for long and short positions which can further expand the price gap.
Some of the stocks in the sector have given up almost 70 % of their recent gains taking significant air out of the bubble. The sector is still overvalued and trading ahead of the fundamentals but becoming attractive to speculate and trade. When a sector is in a bubble and very volatile timing is very important. Manging the exposure and taking profits can make a substantial difference.
Anyone that got in late at higher prices on margin will have been wiped out. e. g the high of OGi was $8.00 today it hit a low of $3.28 a massive drop of $4.72. . Because of the big drop, now the downside to the stock has reduced significantly.
The initial move for the stock started from$2.00 to $3.00 after which the stock went parabolic in a very short time the chances of the stock staying around $8.00 were very low. The right move was to blow at the position from $ 7 to $8 or even start from 6.
After the pullback from $8, it started to consolidate around $5.00 but it failed. Now the next important support level is $3.00. The stock is still very volatile and unpredictable because it is trading with the sector and losing little more value than the daily sector drop. It needs to stop dropping over 12 % in a day and find support soon.
The entire market is in a bubble and now there are concerns about inflation. Some are predicting that we might be entering a commodity supercycle. Copper, oil, and some other commodities are creating new highs as US $ is being devalued. if inflation gets out of control then interest rates cannot remain low. Markets are getting nervous and a pullback in markets is always a possibility.
The house is going to pass a $1.9 T bill. Some of that money will come to the market and we could see some spike in stocks again.