How to find stocks which makes a big move | stockbee

6/18/2008

How to find stocks which makes a big move



Some events have a propensity to lead to big moves in stocks. If you regularly study carefully the stocks making 100 plus moves in a year, you will find in 80-90% of the cases there was a event or series of events at the beginning of their big move. New information leads to big moves. If the new information or catalyst is powerful enough it leads to long duration rally. In most cases the information about the catalyst is in public domain or if you make some effort, you can find the reason for the big moves.

In the first volume of Market Wizard Paul Tudor Jones says:

We have tested every system under the sun and amazingly, we have found one that actually works well. It is a very good system, but for obvious reasons, I can't tell you much more about it.
The basic premise of the system is that market move sharply, when they move. If there is a sudden range expansion in a market that has been trading narrowly, human nature is to try to fade that price move. When you get a range expansion, the market is sending you a very loud, clear signal that the market is getting ready to move in the direction of that expansion.



Not every one day big move will result in long rally, but if a big move is accompanied with a clear , identifiable catalyst, it is the lowest risk entry in a stock likely to make a major move. Big moves after a event like earning also reduces our event risk. It gives us clear reason why to buy this stock and helps us form a judgment on how much this move is likely to last. It also indicates the length of catalyst. e.g. if a company has a a triple digit earnings acceleration along with sales acceleration and margin acceleration, and the stock which was not going up till that time makes a big move, post this surprise. Now we have a clear catalyst. We know strength of catalyst indicated by magnitude of the earnings growth or surprise and we also know this catalyst is valid till next earnings.

Now in real practice some catalyst are easy to understand and interpret. Some catalyst information is easily available and all market participants get it at same time, while some catalyst are difficult to understand and interpret like new product launch or analyst earnings upgrade or biotech drug news.

Big Movers yesterday:

ABAT,Advanced Battery Tech Inc (Google  Yahoo  Earnings  Chart
ARTE,Artes Medical Inc (Google  Yahoo  Earnings  Chart
ASMI,Asm Internat N.V. (Google  Yahoo  Earnings  Chart
ATSG,Air Transport Services  (Google  Yahoo  Earnings  Chart
AZC,Augusta Resource Corp (Google  Yahoo  Earnings  Chart
BCON,Beacon Power Corp (Google  Yahoo  Earnings  Chart
BEXP,Brigham Exploration Co (Google  Yahoo  Earnings  Chart
BRLC,Syntax-Brillian Corp (Google  Yahoo  Earnings  Chart
CPSL,China Precision Steel Inc (Google  Yahoo  Earnings  Chart
CSIQ,Canadian Solar Inc (Google  Yahoo  Earnings  Chart
CZZ,Cosan Limited Class A (Google  Yahoo  Earnings  Chart
DHT,Double Hull Tankers Inc (Google  Yahoo  Earnings  Chart
ELN,Elan Corp Plc (Google  Yahoo  Earnings  Chart
EXM,Excel Maritime Carriers (Google  Yahoo  Earnings  Chart
FMD,First Marblehead Corp (Google  Yahoo  Earnings  Chart
FPP,Fieldpoint Petroleum Corp (Google  Yahoo  Earnings  Chart
FTK,Flotek Industries Inc (Google  Yahoo  Earnings  Chart
GDP,Goodrich Petrol Corp (Google  Yahoo  Earnings  Chart
GNK,Genco Shipping & Trading Ltd (Google  Yahoo  Earnings  Chart
HK,Petrohawk Energy Corp (Google  Yahoo  Earnings  Chart
IVAN,Ivanhoe Energy Inc (Google  Yahoo  Earnings  Chart
KAZ,Bmb Munai Inc (Google  Yahoo  Earnings  Chart
KOG,Kodiak Oil & Gas Corp (Google  Yahoo  Earnings  Chart
LNG,Cheniere Energy Inc (Google  Yahoo  Earnings  Chart
MCF,Contango Oil & Gas (Google  Yahoo  Earnings  Chart
MENT,Mentor Graphics Corp (Google  Yahoo  Earnings  Chart
NGAS,NGAS Resources Inc (Google  Yahoo  Earnings  Chart
NOEC,New Oriental Energy Chemical Corp (Google  Yahoo  Earnings  Chart
PDO,Pyramid Oil (Google  Yahoo  Earnings  Chart
SONE,S1 Corporation (Google  Yahoo  Earnings  Chart
SQM,Sociedad Quimica Chile (Google  Yahoo  Earnings  Chart
TBSI,TBS International Limited Class A (Google  Yahoo  Earnings  Chart
TMY,Transmeridian Exploration Inc (Google  Yahoo  Earnings  Chart
VISN,VisionChina Media (Google  Yahoo  Earnings  Chart

2 comments:

met61 said...

Pradeep,how does the trend of the general market influence your stock picking?
Thanks,Ron

Pradeep Bonde said...

Big moves can happen even under bearish environment. It depends on catalyst and sector.
In addition I have a overall market direction indicator called Market Monitor which gives signal on overall market direction.