Dec

28

In honour of Vic and Laurel, I suggest we start a new department called "Needs to be Tested," where refutable observations make it, while others bite the dust. I would invite readers to join with some testable hypotheses.

I will start with few of my own that I find to have some value for a meal for a day.

a) A market that goes down very hard suddenly in a free fall, then recovers immediately, will often revisit the low point as the original move was just the Mistress checking how many victims she can take with her. She then recoups and re-attacks and the low is often revisited in time after the big recovery that most green specs take as a bullish sign

b) When a big offer shows in a dull stock all of a sudden, expect the stock to move through the offer and well above it in the short term. This serves two functions. One is to grease the wheels of commerce from the fees generated from the execution of the big order and also a deception function is satisfied with the seller that is in a rush to sell while he is scooping the stock on the other side.

c) Markets sometimes have a delayed reaction to good earning reports and news. A stock that doesn't move immediately on good news often has a delayed explosion in the direction of the news. While the green observer would take the stock action as bearish, since the news must be priced in, it is often the wrong assessment and the stock moves in the direction of the news the following day.


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