Tuesday, December 21, 2010
Profiting from panic selling
Panic selling occurs when a stock price rapidly declines on high volume. This often happens when some event forces investors to re-evaluate the stock's intrinsic value, or when short-term traders are able to force the stock price down far enough to trigger long-term stop-losses. The entire process creates a tremendous opportunity for bottom-fishers to initiate long positions, especially if the event behind the panic selling was non-material or speculative in nature (such as an SEC investigation or an analyst opinion). Here we shed light on the panic-selling process and introduce a model that can help you predict the right time to take a long position after panic selling occurs. Read more.