Post by
Starsearcher80 on Aug 04, 2022 11:32am
SHORT TERM MOTIVATORS FOR THE UPSIDE SHAREPRICE
When there is surprise good news, or in this case, exceptional news, there is a fairly predictable and natural sequence of events that are short term motivators to the price. Here is what is typical for stocks in this scenario. Note that it is not a hard and fast rule, but in my experience, it is quite predictable.
1) The stock moves strongly out of the gate. This is some newly motivated buyers who are right on top of the news, and quite often a strong dose of short position covering. I would say that this is exactly what happened for Bombardier this morning, given the drop after the first 1/2 hour of strong rise. Note too that the "drop" needs to be in perspective here. The stock continues to be up substantially. The activity today is typically those "close to the market"
2) Tomorrow the news cycle begins. This brings in a lot of people who wouldn't necessarily know the news release in real time, but keep on top of things via various media..the paper, online, news channels etc. That Bombardier is a household name will "help the cause" here, and there will be new buying come in on this coverage, which I expect to be strong. It's certainly a newsworthy story.
3) I would also expect over the coming week to see a flurry of upgrades by brokerages, which will also spur further new buying.
4) As I noted before, Institutions will now start to take positions, as the company has cleared some of the "question-mark hurdles" that may have kept them on the sidelines before. This insitutional buying, and I think there will be a LOT of it coming in over the next week or two, will be a very strong motivator to the share price.
5) I wouldn't be surprised at all to see a further credit-rating upgrade by Moody's. These are important, and can certainly do wonders. Bombardier I believe has now earned a further upgrade, so this news should also come out in the near term.
So while we all pay attention to the price action today, quite often it's the next couple of weeks that bring the bigger rise. Today already is interesting, profittable, and yes, at times annoying. It's slightly par for the course with this stock. Lots of fun and games. Overall though, the substantial rise to come makes the up/down/sideways noise of the moment inconsequential.