daytrade diaries... friday, page-28

neerajc,

As stated earlier in my post- the news may or may not have an effect on the SP- best thing to do with shares having a price sensitive announcement is to watch which way the trend develops. Be especially weary of the first 15 to 30 minutes of trading on the morning open (when news is released first thing in the AM, I have witnessed too many occasions where there may be a price spike at the auction, followed by 15 to 30 minutes of intense selling leading to a downward spike, then followed by a steady rise during the day.. I have read in various literature that this phenomenon is often as a result of brokers, who know what orders they have for a share, short selling and buying back at a lower price, knowing it will go up on the back of significant orders. This spike up, down and up again does not always occur, because if the news is significant enough the share may just gap up on open and continue onwards and upwards, and you need to utilise your experience of the types of news events, and their effect, to make a judgement call. Ultimately, depending on one's trading strategy, it needs to be noted that we are day traders and should really look for momentum to be confirmed before buying to minimise our risks, although I personally vary my strategy based on my expectation of a price move, because the greatest gains (and potential losses) can be made if you get in early. ALZ's announcement recently is a good example to refer to.