Stockbee: How to find stocks which makes a big move

How to find stocks which makes a big move

June 18, 2008

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 :

UnknownJun 18, 2008, 10:29:00 AM
Pradeep,how does the trend of the general market influence your stock picking?
Thanks,Ron
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Pradeep BondeJun 18, 2008, 11:18:00 AM
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.
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