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Joined: 3/21/2006
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There was a volume spike on the chart for ANAD today that was news driven. I have been reading up on a technique used by some known as a "Bull Short".
The theory is that once the news has been digested into the price of said company and that you will see the price action decline, giving back about 30% of the run. In some cases the following day might continue to go up but usually within a day to three days you will get a chance to short the stock.
Here is the news taken off "Yahoo Finance" and below that the chart.
If any members here are familiar with this strategy I would love to open a discussion...
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Joined: 3/21/2006
Posts: 4,308
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Registered User
Joined: 2/5/2006
Posts: 1,148
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sounds like good way to lose your a$$.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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I guess the next logical point would be to reason if this is a "break-away gap" or a Bull Short. The difference being that this spike in volume and price was a news driven event.
Take a look at BIDU for 1/14/10 & 5/12/10 these are good examples of this kind of news driven price action. The May 2010 event was in reaction to the recent 10 to 1 split. In my chart below you will see GMO after similar circumstances.
Funnymony is wise to use caution and one cannot guarantee that price will retreat and if so then when. It is about playing the odds and understanding that this volume action has meaning. You can watch price action very close on the intraday charts first on the hour then scale down your time frame as the action evolves. Of course it is not my intention to blindly short the stock but we will see how this develops as I have just been introduced to this strategy.
Here is the chart for GMO and if you look at past charts than you will see the difference between the Break-away gap and the Bull short.
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Registered User
Joined: 10/26/2005
Posts: 238
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I'd have to agree with funnymony on this one.
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Registered User
Joined: 6/6/2005
Posts: 1,157
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LOL Funnymony, had me seriously cracking up.
Hi Apsll,
I have traded these before, but look for a GAP after a massive run up (when everyone was buying the rumor), usually over 50-100% in a month, and a buying capitulation gap at the end of an uptrend. Then trade the short on an intraday chart, looking for a 1-2 day trade with a close stop.
They can work well. Have to watch for another upside gap up which is why holding overnight can kill you. I like trades based on psychology like this though.
David John Hall
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Registered User
Joined: 3/21/2006
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Another good example to view is HOKU back in June/July 2007 this too was a news driven event and Davidjohnhall is correct that it is all about psychology. Greed and fear can be a powerful friend to those on the other end.
Just set up a scan to catch these stocks and then see if they are news driven and play them accordingly. The markets are not going to make it easy of course, as you can see by my chart bellow that the price action does not sit up and beg or roll over nor will it do any other tricks for you.
Sometimes the event will last up to a week and this could even move higher over the next few days.
Here is the chart for HOKU.
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Registered User
Joined: 6/23/2008
Posts: 38
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Takes alot of balls to short a <$5 stock, I prefer to short but I learned my lesson, I never short less than a $20 stock. good kuck
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Joined: 6/23/2008
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sorry, good luck , I need a computer that will print what I think not what I type!
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Registered User
Joined: 3/21/2006
Posts: 4,308
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$5 stocks decline to $4 all the time. That is a 20% gain. What is so bad about that?
No different than a $20 stock declining to $16
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Registered User
Joined: 1/12/2009
Posts: 235
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Hey Apsll. How are you faring in the current market enviornment? Hopefully we continue to rally but I can't help but notice the head and shoulders formation taking place on the S&P and DOW. I certainly hope we do not get a major reversal, but in the current geo political and economic enviornment anything is possible.
I never thought I would be so happy to stay completely in cash before.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Hello Traderm..
I am not doing well. But I am testing the swing trading waters as I currently have three open long positions.
BEAT
RVBD
ATPG
If the SPX drops below the 20 sma then I will decide what best to do next at that time. My losses have been small, but so to has my gains. It is a see-saw game right now with me still on the losing end but the seeds that I plant at the right time will bare stronger flowers the earlier you get them in the ground.
Half my trading group says we go down and the other half say we go up, so there you have it. I guess that is why the last three days have been doji's. There is a lot of indecision and sooner or later this tug of war will end with someone in the mud.....
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Registered User
Joined: 3/21/2006
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QUOTE (traderm30) Hey Apsll. How are you faring in the current market enviornment? Hopefully we continue to rally but I can't help but notice the head and shoulders formation taking place on the S&P and DOW. I certainly hope we do not get a major reversal, but in the current geo political and economic enviornment anything is possible.
I never thought I would be so happy to stay completely in cash before.
One could almost see head & Shoulder patterns formed in the gently sloping hills and valley's within a simple channel. In my chart bellow I show such a channel. I leave it to fate as to which...
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Joined: 3/21/2006
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Registered User
Joined: 3/21/2006
Posts: 4,308
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LTBR is another candidate for a Bull Short.
I do expect another strong day because the news was good but soon you should be able to short this one.
Anyone catch this wave?
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Wow, who ever figured this one out had a lot of fun over the last two days.
ABK what ABK???
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
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Registered User
Joined: 3/21/2006
Posts: 4,308
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ANAD has proven to be a succesful "Bull Short" and now it is prime to go long.
The golden candles represent a "mock" rally that I see as a viable play on Monday morning. If you do get a nice entry then I would not hold for more than tree days max, maybee two (Lets not get greedy now).....
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Joined: 3/15/2010
Posts: 54
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Sir, I have seem quite of your comments in so many different systems, and indicators.
It seems you keep drafting from one to the next one.
From my stand point, and for what I see on a daily basis you just have to take a stand and go with it.
Adaptation comes from within that position.
I am very doubtfull of your bull bear, and warm others to be also as carefull about implementing such a risky and what it looks a nonsense technique.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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I did not think that it would take long for the sheep’s clothing to ware away... You can drop the "Sir" routine; I think that most here know who you are.
The Bull short is not my idea it was just shared with me and so I thought that I would pass it along for those that like to short the market. The results are not that bad when you consider that the two candidates I posted both did pretty well. I do not need your advice about taking any stand. I know where my strengths and weakness are. Instead of just casting stones then please tell me what is wrong with playing bull shorts? It is just like any other trading method if one uses common sense management.
I look forward to your rebuttal and please keep the author out of it (mmm where did I hear that one before), just keep your analysis in the context of the trading style and how it cannot work even in light of my two examples here.
PS: It is gems like this that make it easy to spot you from a mile away -
Quote: bigblock
"I have seem quite of your comments in so"
At first I thought it was Arabic but then I remembered that it was just bigblock....
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Registered User
Joined: 3/15/2010
Posts: 54
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Sir, I am afraid you are quite confused. Please stop making others as confused.
I took a look at your charts and couldn't resist the impulse of warning others about your nonsense comments.
I suppose everyone is free to choose what they want to do with their time and money. I personally think that your comments and ideas ("borrowed ideas") make a lot of people lose both - time and money. Just not fair in my opinion.
Your creativity is keen to success in the markets. You surely will not be helping yourself or anyone else by trying to talk to them into believing some past concept is to succeed. IF it was THEN there would be lots of rich folks. As you well know the markets work in a different way, and most don't come ahead.
Just a thought.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Is that all that you are going to say on the matter? Where is the counterpoint? Like a bad joke I am left waiting for the punch-line.
You say that you are some kind of advisor to financial institutions but you barely have a grasp of the English language. How do you advise when they ask you for details and all you do is advise them how much confusion is in the air. Let me know what banks you advise and I will make sure to never do business with them.
The only confusion on my end is why the Wordens are allowing this farce to continue. I have always thought of you as a very weird little man but this is getting down right scary that you feel the need to further perpetuate this charade...
Alright now please stop polluting my threads unless you have some value to add. Just telling folks that they are confused is not very constructive and shows a great lack of intelligence.
No big surprise there though..
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Joined: 3/21/2006
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PS: The reasons why people fail in the Markets is easy. Fear, Greed, Lust, Vengeance. Yes some of those "Deadly Sins". Has nothing to do with trading Methodology. One other great reason for failure is lack of timing and ignorance of trade and/or money management skills.
If you were not so confused you might know that.
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Joined: 5/9/2010
Posts: 19
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Actually it is quite easy to determine whether or not a significant gap up has any "staying power." Over the past week we have seen many examples of such. If you go to your 1 minute time frame (some sites only keep 20 days worth, so it is somewhat limited---you will need magnifying tool), you will usually see that this spike in price was simply filling a price gap. I have tested this theory by simply waiting until a group of selected stocks have actually retraced to the exact penny before shorting them.. To the penny! Try it! It significantly decreases upside risk when shorting (also works for going long), and eliminates the need for setting stops. Now, some may argue against failing to set stops, but how many of us have been stopped out by these price spikes, and as such, have lost a significant sum of money? The only thing that I can think of, which would hurt an investor when applying this method when shorting a stock (failing to set a stop after determing remaining price gaps), is if that particular company gets acquired. This is why you must do extra research to determine whether or not the company has a chance of being acquired. Cheers!
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