It is said that people have no idea why Twitter's stock is moving up.
Chart courtesy of Stockcharts.com
The stock is exceeding expectations by a huge degree.
Why?
Various commentators are making guesses as to the cause.
I love it when commentators look at price moves and then survey a list of reasons and pick one. How in the world do they know which reason is right? How do they know the right reason is even on their list? They are guessing and trying to make you believe, as they do, that they know what they are doing. For sure they have not talked to every buyer in the stock, right?
Here is my view. In the stock market, you most investors and traders necessarily have imperfect information. The market will transfer money from those who don't know to those who do.
By the time those who don't know find out, it will be too late for them to act as the information will be reflected in the price.
Therefore, when you see the price move like TWTR, you know that you don't know. If you are long such an overpriced stock, you wait for the stock to either slow and break the uptrend line to make a huge spike up in a reversal pattern. Otherwise you ride the wave.
If you want to short such a stock, you had better be damn sure the uptrend is dead and even then think twice.
The chart will tell you what is going on.
Price moves are their own advertising. You want buyers in a stock, push the price up. You want sellers, push the price down. This is why bear raids work.
Be patient. Sooner or later some of those insider and pre-IPO investors in TWTR will be tempted to take profits. The stock will become soggy as the buyers eat all the sellers' stock and cannot find a bigger fool to sell to.
Remember pendulum theory. The more the stock swings up, the more it will swing down.
No comments:
Post a Comment