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from letting too much anxiety, caffeine, sugary foods, or other substances give us an "itchy trigger finger" when trading? |
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News events that come out of nowhere. Events to jar a stock, like the resignation or death of a key officer; financial improprieties in record keeping; production problems; rumors of a buyout or merger; legal problems that become public; analyst upgrades or downgrades; insider buying or selling; and various other company intangibles, such as false or true rumors, that may move the stock. |
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Perceptual discrepancies between company value and stock price. You cannot control the perception Wall Street may have of a company and whether or not analysts choose to cover it, "pound the table" for it, or whether institutions are willing to get behind it. Some fundamentally good companies wither until they receive analyst and institutional support. |
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As individual online traders and investors, we have no control (and often no knowledge until after the fact) of all the behind-the-scenes gyrations being exercised by governmental agencies, company insiders, analysts, brokerages, arbitrageurs, venture capitalists, institutions, and any other significant Wall Street influence that helps move the markets. Despite real-time news, we are the very smallest piece in a very large puzzle and still the last to know the latest news of their machinations. |
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Earnings reports. Reports that meet analysts' consensus estimates but fall a penny or more short of the "whisper" number; reports that meet the consensus and then hit the whisper number but are followed by a less than stellar conference call; next quarter projections not meeting or exceeding present quarter; analyst interpretation of report and call and any upgrades or downgrades based upon them; any comments made by the "axe." |
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The axe is the most important analyst, by virtue of strong interest in the stock through either participating in underwriting or his or her research department following the sector and the company closely. The axe has gained influence through tenure, previous correct predictions, timely and influential connections to company management, and gaining the confidence of institutional money managers. When the axe speaks, everyone listens. |
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Natural catastrophes. Catastrophes like an earthquake in Taiwan that threatens to slow down around-the-clock production in a slightly damaged plant half-way around the world but immediately brings down the stock price of Dell Computer. |
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