So I had an idea the other night...
what if you entered long positions near the close in the stocks that are down the most with the highest volume on any particular day and did the inverse for ones that are up the most? And close them at the open the next day benefiting from a bounce post oversold/overbought.
I paper traded this idea for a few weeks and noticed some potential. Then I started with small 2k positions on each and after a week I was feeling pretty confident! Particularly on May 6th when my positions in ACAS and DPTR opened 10% gapped up! They were down the previous day 32% and 21% respectively.
Then I got burned with DRYS which was down on May 8th 21% and opened up down ANOTHER 14% the following day without looking back. Similar thing with LEA and UCBH a few days later.
I then noticed that if the general market context is in a certain direction, it doesnt matter whether they were down or up extreme levels, i.e. if the market in general opens gapped down, even stocks that were already down 30%-40% the previuos day can open at lower levels and continue going down.
So I'm not sure now on the idea, although perhaps with a bit of tweaking there may be something.
Anyone tried this in the past? I've been thinking lately if the market in general is up then go with shorting the stocks that were up the most and if the general market is down do the opposite (go long the ones that were down the most)
I used the ones with voume above 10Ms, and stocks below 5$ (most of the ones on the list any day) can't be shorted.
Thoughts?
J
what if you entered long positions near the close in the stocks that are down the most with the highest volume on any particular day and did the inverse for ones that are up the most? And close them at the open the next day benefiting from a bounce post oversold/overbought.
I paper traded this idea for a few weeks and noticed some potential. Then I started with small 2k positions on each and after a week I was feeling pretty confident! Particularly on May 6th when my positions in ACAS and DPTR opened 10% gapped up! They were down the previous day 32% and 21% respectively.
Then I got burned with DRYS which was down on May 8th 21% and opened up down ANOTHER 14% the following day without looking back. Similar thing with LEA and UCBH a few days later.
I then noticed that if the general market context is in a certain direction, it doesnt matter whether they were down or up extreme levels, i.e. if the market in general opens gapped down, even stocks that were already down 30%-40% the previuos day can open at lower levels and continue going down.
So I'm not sure now on the idea, although perhaps with a bit of tweaking there may be something.
Anyone tried this in the past? I've been thinking lately if the market in general is up then go with shorting the stocks that were up the most and if the general market is down do the opposite (go long the ones that were down the most)
I used the ones with voume above 10Ms, and stocks below 5$ (most of the ones on the list any day) can't be shorted.
Thoughts?
J
