you do need to keep an eye out for very bad news. We never buy on good news and even more rarely buy
on bad news. If you do happen to catch a fundamentally destructive news story in a stock you are in, do not
be afraid to sell immediately. In the OTC BB, story's typically take from twenty minutes to two days to play
out. If you miss the story be ready to take advantage of the dead cat bounce that is likely to follow. Most of
the time you can get away with a small profit and then be out of the stock completely for the slow downdraft
that will probably continue. We only buy on no news which hopefully gives us an advantage.
Lets talk about when to sell a stock because of news. We know that buying a stock is the easy part and we
never do it right after good news. Always buy when there has been no news for a while. The only time to
sell a stock is either on good news or very bad news. We typically average down, but if horrible news
comes out, its obviously better to sell everything for a loss and save a lot of money. Only look for news that
changes the entire fundamental structure of the company. Be sure to read everything that comes out
because even the worst news can sound good in a press release. One example would be if the headline
reads “WXYZ corp announces restructuring and intent to purchase ABCD inc.” At a glance this almost
appears o.k., but further scrutiny will uncover that the company has ceased all operations and is currently
looking for a couple of companies that are worse off than them to buy. A lot of times things will work out but
the stock is definitely going down and not returning to the same levels for quite some time. You usually
have 20-30 minutes to get out at a reasonable price and watch for the dead cat bounce the next day. It is
definitely important to monitor news throughout the day for sells but not buys.
When stocks sell off on heavy volume for no apparent reason, never assume that are public, but are not
reported for a day or two. This happens a lot on the OTC BB. One example would be if a judgment was
reached in court instantly becoming public knowledge but not instantly released on the news wire. Most
news from these companies are internal press releases any way and are rarely from an outside source.
Remember that any huge fundamental change will be reported to the SEC and available to you. Big sell
offs can also be the result of related news such as mortgage rates or new laws. It could also simply be a
technical sell off. Never act right away in these situations because when the news does come out, the first
sell off was just the tip of the iceberg.
Most speculators read up to the minute news and trade immediately. We prefer to wait and watch the
predictable pattern take its course. When it comes to news, less is better. We love companies that tell you
everything you need to know in SEC reports rather than tons of press releases. The longer a stock goes
without news the more likely it will respond when important developments become available. Keep in
mind that the news itself is not making the stock move, it's the possibility of more good news that really
makes them jump.
|©2010 Penny Stocks Weekly - Home - PSD 10 - Terms - A Message From The SEC - Important Information On Penny Stocks
Full article access includes Buy, Sell & Stop-Loss conditions along with a no nonsense
trading strategy. Don't jump in blind, subscribers also get a detailed risk analysis,
suggested position weight and time horizon ideas. Also access our Small & Micro Cap
Get started for free right now with our weekly newsletter.