It is 1:00 pm on Monday and I just signed into the market for a look. Up came my chart of GILD because it was the one I had left on the screen Thursday when I was last signed in. Just as I had anticipated, the big run-up led to profit-taking by the traders. Friday was the day the steam came out of the move and today, the fall back. The chart on the left is GILD dating back to just before my short was initiated. Chart on the right is Friday and today.
Of one thing I am certain, I am not an oracle. I just know that the reason stocks run up is because there are more buyers than sellers. At some point, the buying will cease and the selling will begin because many buyers want to take their gains and move on. These are the short term traders. The long-term folks are still in and that is why the stock does not fall all the way back to where it started before the news hit. The news that sent the stock up was legitimate and so there likely are future gains to be reaped as Gilead realizes the potential of its positive mid-term trials. The investor types are holding for those gains. If late-stage trials counter this latest news, look for the same thing to happen in reverse as traders jump in on the short side and some of the investors get out.
Of one thing I am certain, I am not an oracle. I just know that the reason stocks run up is because there are more buyers than sellers. At some point, the buying will cease and the selling will begin because many buyers want to take their gains and move on. These are the short term traders. The long-term folks are still in and that is why the stock does not fall all the way back to where it started before the news hit. The news that sent the stock up was legitimate and so there likely are future gains to be reaped as Gilead realizes the potential of its positive mid-term trials. The investor types are holding for those gains. If late-stage trials counter this latest news, look for the same thing to happen in reverse as traders jump in on the short side and some of the investors get out.
Such is the ebb and flow of the market. Very few get the entire move. Some are in early, some are in later. Some exit very quickly, some hold on.
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I had the same thoughts when Toyota plunged to $71 off the recent news. I knew the shorts on that one would buy to cover and take their gains. And they did, causing the stock to bump up 8.5% off that support level. Was it a premonition? Of course not, nothing supernatural about it! It is just the waves of the market, pulling back to sea, then lapping back up to shore. To and fro, to and fro. The more I study it, the more I find that the song remains the same. And that is my last mixed metaphor of the day.
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And there is comfort in the familiarity of it. And familiarity is an ally of confidence.
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I had the same thoughts when Toyota plunged to $71 off the recent news. I knew the shorts on that one would buy to cover and take their gains. And they did, causing the stock to bump up 8.5% off that support level. Was it a premonition? Of course not, nothing supernatural about it! It is just the waves of the market, pulling back to sea, then lapping back up to shore. To and fro, to and fro. The more I study it, the more I find that the song remains the same. And that is my last mixed metaphor of the day.
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And there is comfort in the familiarity of it. And familiarity is an ally of confidence.
