why would a stock climb on no news?
- Thread starter cashclay
- Start date
supply vs demand.
Here's a last summary by the author of "Professional Commodity Trader". A book I highly recommend even more than Reminiscences of a Stock Operator.
The author based on his analysis of a copper chart was accumulating a large copper position.
A guy from a well-known private banking group comes in and hands him a portfolio of research done by many smart guys describing there was too much copper supply and that they plan to purchase instead in 1973.
"Well the rest is history. Yes, there was too much copper in London warehouses-much too much. And this enormous inventory was weighing on the market. And no one could have imagined-least of all my banker friend or his fancy economic study-how this enormous supply could be consumed over the near term. I couldn't either, for that matter , but that didn't trouble me.The market action "told" me in no uncertain times that prices were heading higher, and my strategy was based on that. Let the others worry about why it may go up-they'll be still pondering long after the move is under way.
What actually happened is very simple. One day a Chinese trade group arrived in London, and when they went home, they took all the copper with them. Suddenly no more copper!
And a year later, when my banker friend was planning to buy his copper, it was selling at $1 a pound."
The author based on his analysis of a copper chart was accumulating a large copper position.
A guy from a well-known private banking group comes in and hands him a portfolio of research done by many smart guys describing there was too much copper supply and that they plan to purchase instead in 1973.
"Well the rest is history. Yes, there was too much copper in London warehouses-much too much. And this enormous inventory was weighing on the market. And no one could have imagined-least of all my banker friend or his fancy economic study-how this enormous supply could be consumed over the near term. I couldn't either, for that matter , but that didn't trouble me.The market action "told" me in no uncertain times that prices were heading higher, and my strategy was based on that. Let the others worry about why it may go up-they'll be still pondering long after the move is under way.
What actually happened is very simple. One day a Chinese trade group arrived in London, and when they went home, they took all the copper with them. Suddenly no more copper!
And a year later, when my banker friend was planning to buy his copper, it was selling at $1 a pound."
Stock prices move based upon what's "known", what's "anticipated/hoped" and what's "feared". It's left to traders to deduce "why" and the proper play.
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More buyers than sellers...
Couple of different reasons but at its very core a stocks price isn't based on news. Sure that can be a catalyst but it's purely based on price action. A traders buy trigger and an Algos inputs aren't based on news (yes I know this isn't 100% true when referring to HFT.. another time.).. Both of the aforementioned make decisions based on cold hard price action. Support/resistance/patterns etc.. For example.. "Buy when daily volume is more than 20 day average volume while 50ma is above 100ma" yada yada you get the idea. Hate to use such a generic phrase but its purely numbers game. An Algo doesnt know if Tim Cook is a good CEO.. Nor would it probably care if we could apply human characteristics to it..
But then you also have things like Seasonal changes, Tandem sector movement, causal effects etc etc.. For instance if $AAPL starts to tank at any given time, you can be almost guaranteed to flip your charts over to any one of its larger publicly traded suppliers and they will be doing something similar. Especially if a majority of their business is AAPL based. So the supplier isn't necessarily moving on news directly related to it.. It's moving on pure fear from traders. But once again this is all a catalyst. Historic price levels typically dictate the volatility of movement in future prices..
But this is all my opinion. I'm sure there are some folks that will disagree with me.
But then you also have things like Seasonal changes, Tandem sector movement, causal effects etc etc.. For instance if $AAPL starts to tank at any given time, you can be almost guaranteed to flip your charts over to any one of its larger publicly traded suppliers and they will be doing something similar. Especially if a majority of their business is AAPL based. So the supplier isn't necessarily moving on news directly related to it.. It's moving on pure fear from traders. But once again this is all a catalyst. Historic price levels typically dictate the volatility of movement in future prices..
But this is all my opinion. I'm sure there are some folks that will disagree with me.
You asked this question before and I replied and asked you the name of the stock after you said you had done all the research to verify there was no news.
I then checked to find out there was indeed news that you simply ignored, discounted or just didn't see.
There's also the issue of social media itself. Someone or group of folks may be drumming up heavy positive interest or negative interest in a stock that has no traditional news events. Simply, although you may have check all your bloomberg news, reuters news, corporate news, Google news or whatever and there's nothing there...don't forget to check social media resources such as twitter, stocktwits, yahoo or other non traditional discussions that showed a large spike (pump) of discussions prior to the volatility spike that pushed prices upwards or downwards.
The use of social media is a well known tactic for penny stocks and even used on regularly traded stocks today especially by an organization that has a large subscription for its newsletter in which they give publicity for the stock and their subscribers push the stock higher or lower.
There's also the issue involving correlation when news is about an industry group the stock is within or when there's big news about another stock in your stock's industry group even though your stock had no news. This type of correlation news is very common.
Anyways, I remember many months ago when you started that other thread about a specific Chinese stock that had "no news". That's what I did...I checked several traditional news resources and there was a big non traditional stock discussion (hyping) that occurred online (social media) just before the spike.
Social media and correlation news are very powerful weapons for stocks to get publicity to help push stocks up or down when there's no traditional news specific to your stock especially those stocks that have low liquidity. Actually, its a very smart thing to do by investors but only if they don't do something illegal like trying to spread false news to push stocks up or down...that's illegal and have gotten many folks arrested.
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Stocks move on (1) what's known... which may not be known to you, plus (2) what's hoped, feared, anticipated. You often can't know those issues either, so it's imperative that you keep your money "on the right side of the charts".