This is how I'll trade SGH when the ann comes out: Scenario #1:...

This is how I'll trade SGH when the ann comes out:

Scenario #1: All good
Put all your buys as high as you could. I have trade a number of highly shorted stocks (e.g. JBH, FLT, MTS, MYR). The moment of a good ann/half-year/full year results are better than expected, you will see all the short covering. Remember 9% of shorts have to be covered and that is about $110M worth of stocks.

E.g. if last traded price is say $3.55 (hypothetically), and open price is $4.50, expect to see about $5.50 at close of day. Generally the SP will end up similar to the gap price. Have tested this in many years of trading and it's about 80% correct most of the time.

Scenario # 2: No good
Place your buy at various buy orders below the open price. Wait for 5mins of heavy buying and selling at a tight spread with large volume. You will want to start buying once the selling pressure ease, mostly within the first 5mins of trading. Most selling should be exhausted within the first 30mins.

E.g. Last traded price $3.55. Gap down to $2.80. For gap down, I can't really tell you what price to buy as it all depends on the down momentum. I will go in a few mins after, likely to pick up at $2.70, $2,60, $2.50 and so on. Expect to see a quick V reversal as the shorts have anticipated this.

Note this is not the day to sell out as you'll be kicking yourself once the short start to cover and SP starts to rise.


cheers
pcyc