A 17point drop on ASX200 but a sharp selloff in the small/microcap space. The red ink hasn't yet dried yet it appears with EOFY selloff coupled with potential threat of technical breaches in investor mindset. On the stocks on my watch-list that I have been tracking, today marks the lowest ebb reached collectively by that portfolio of stocks.
It may have been procrastination in not taking a smaller profit or cutting loss earlier, but most may be thinking it is now too late to sell. So look out for a dead cat bounce - a short rally only for people waiting to unload in July after EOFY, be careful about buying into those falling knives stocks.
Phil Anderson has talked much about 'dead stocks' (stocks that are in trading ranges at the low end of price action) (posts earlier on this) as there is opportunity costs associated with maintaining them. Firstly, tied up capital that could be better deployed in Quality growth stocks (when they retrace) and secondly, more pain ahead for these tech microcaps as they announce CR and disappointing 4Cs (they will be if they had nothing to show for previously and management will buy more time with more excuses e.g delays, progress on other fronts etc). Hope is not a strategy in investing in speculative stocks for those not practising adequate risk management (ask those who were involved heavily in BIG and GSW and decided to hold despite very grim revelations).
