Whoa! What Happened To NTE? Down 5.45!
Q: It closed Monday at 34.85, almost exactly on its 45-dma (six months chart). Tuesday it closed at 28.85, just a tad below its 90-dma, down 6.00 or 17.22%. Today's low, so far, is 26.50, about midway between its 90-dma and its 135-dma.
A:
With this you could make an argument to trade stocks <$5.00 because they
are probably not over owned by institutions, ;-) and you'd expect large
+/- percentage moves right from the start. No need for me to instruct
that the same due diligence would apply.
If random, baseless large percentage moves right from the start is the game
you
basically rule out one reason that a stock was moving (institutional activity).
On NTE, the only thing that would have induced me to buy that stock at 26.50
was the trade setup that institutional activity was taking place, thereby
making that the basis of the stock movement rather than the stock move being
based on some other random unknowns. That trade setup would have been correct
this time, because NTE is back near 32 only a few days later. If that
possibility/trade setup wasn't there, then I'd never touch the stock, just like
I usually never touch stocks under 5.00 because you can't count on their moves
being institutional (as opposed to fundamental) to provide the trade setup.