The trading of shares in Neon on The 11th Sept 2013 was like the listening to Ride of the Valkyries. http://www.youtube.com/watch?v=1aKAH_t0aXA&list=PL9529DC9098A4D99B
The philosophy of the common share market trader is met with differing outcomes depending on who’s controlling the wheel of fortune.
Go back and research the archives of many of the spec Oil & Gas stocks of yesteryear where they were in the same position as a Neon. What you will uncover is quite amazing to say the least.
Is there a pattern to the madness of mayhem that is bestowed on the many by the select few? The variables are large to say the least. First of all you have the technical traders, who are following the drivers behind the wheel. Messer Mr Market and his merry men of leaders from the large Capitalist and risk adverse professionals pulling behind them there many followers of mums & dads and tech alike.
After the initial burst out of the station, the shares go through a consolidation pattern. A good bullish pattern would see a flag pole being erected, followed by the formation of the flag.
This is the million dollar question, as to what comes next. In a very bullish case we may see a longer sideways flag pattern before an almighty stampede, and the erection of a new flag pole. In most cases, if we are to believe some have news before the rest of the market, then there are two schools of thought!
The first and most practical, is the driver of the market has two options:
a) As the share price tracks sideways after the initial busrt, they slowly sell down in an organized manner, pulling out by selling to the many that remain bullish. Then wham bam thank you mam, the last hurray drive up before the final dump. This is achieved with a high level of volume of shares traded daily, over a good 4 to 5 day trading period of time.
b) Volume is the key; shares continue higher by rising slowly as steady she goes wins the race. News hits and having had a good long strong ride up; the shares direction depends on the news of the day. Good and continues higher, Bad and major correction on massive volume occurs.
What did we experience? We had our initial volume increase and erected flag pole. Then the consolidation BUT what we not did not get? We did not get the massive volume increase over 4 to 5 trading days to excite others to buy before the dump!
Think about it logically, what we had on the buy side for well over two weeks leading up to the Valkyrie was very little buyers entering, so hence low volume. Basically, no buyers.
If all was bad, then we would expect some large monumental volume to entice the new buyers in, driving the price higher as the heavy weights leave the building, before the collapse.
Let’s hope the news is good. Good luck everyone.
NEN Price at posting:
26.0¢ Sentiment: Hold Disclosure: Held
