SOME WOULD SAY....So two guys are on the side of a mountain, standing side by side. The one guy says "Wow, this is SO hard to do!" The other guy says "Wow! This is SO easy!!
Now, if you just look at where they are on the mountain, you would have that same one dementional view as just looking at the price. Without context, or backdrop, this static view really means nothing.
So let's add some colour.
One guy is climbing UP the mountain, and one guy is coming DOWN the mountain. Ohhh, so now there's context, and things start to make sense. It's the same in the market.
So,
Some would say the run is over and they feel sad.. I would say we had a MASSIVE run yesterday to consider. We ran almost $4.00. Now would that person be happier if we ran $2.00 yesteday, and then another $2.00 today? Of course they would be thrilled. But to run $4.00, and then zero, it doesn't feel so good. Emotional response is creeping in, and that's not good.
Let's go back to the mountain idea. If you were climbing yesterday, and you decided to DOUBLE up on the total rise in one day, you would be thrilled...and tired. Is it reasonable to take today off? Absolutely! Now, personally, while we all like those BIG gain days, I think I would take the more measured moves up. Yes, net it's the same. But, I prefer the strong and steady moves. Anyway, perspective here of where you've come from does add colour to the day. There's nothing wrong with consolidation, to let the stock "catch up to itself".
Some would say, "well if the run is over for now, I'll sell and circle around." I would say that far too often, retail investors change their narrative to fit or boost their mood. For example, they enter someting as a short term trade. But the trade goes against them. So they buy more, if only to sooth their lousy entry. Then the stock goes south again. Then they get afraid. And then they change their narrative. Now their trade is an "investment". "I really like the company, so I don't mind holding it.
Know what you enter as, and don' change it. If it's a trade, work the trade. If it's an investment, work the investment. But being both, or switching back and forth, is generally a losing proposition.
Some would say, "Wow, these swings are really powerful. Down a buck or two, up a buck or two, and that can be all in the same hour!" I would say, yes, that is the nature of a low float stock in flight, and that is the nature of a stock that runs SO hard. To me, it's not how hard it runs, so much as how it behaves after that. Consolidations also take various forms, and can be telling as well, giving clues as to what is coming next.
Some would say, "I have a nice profit. I'm taking it!" I would say you're breaking a BIG rule. NEVER base a decision on how much you've won or how much you've lost. Those factors have NOTHING to do with an assessment of how the stock will move, which is really the only thing that matters. Yes, we all look at the gain/loss column. But in keeping your emotions in check, if you were to look over my shoulder, you would have NO clue whether I was up a gazzilion dollars or down a gazzilion dollars. That's because I've trained myself not to allow emotional content of gain or loss to enter the room. (Ok, actually if I'm really having a bad day, for some reason I put my feet up on the desk. I think it's to help calm my nerves and focus. It's a silly thing to do, but true.)
Enough for now.