High StockRank with changing technicals to bearish

9th May '17 by minnow

6 comments 3956 reads

This has happened a fair bit recently and not sure what to do. Do I just sell early on when the bearish indicators rear their ugly heads, or just sit on these stocks for the long term potential. When the stock also has it's StockRank number decrease, say to below 80, then I am a lot more included to just sell it.

I'm fairly new to this and am trying to understand why a stock price would drop say 20-30% even though it's underlying StockRank number still maintains a high number in the 90+ range.

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About the Author

Minnow

Premium Member

6 comments

underscored

9th May '17

http://www.stockopedia.com/content/what-should-you-do-when-a-stock-plummets-buy-hold-or-sell-91386/

minnow

9th May '17

Thanks for the link! Summarizing, if the QV number is also going low, then sell. if the QV number maintains a fairly high value, say 90+, then it is much more likely to recover within 1-3- months, so keep it.

I generally also apply a relatively high QV number when I buy stocks anyway, so am thinking this should help my return as well.

underscored

9th May '17

To my mind, it also seems to depend on your time horizon and why you are holding a specific stock (weeks/months?)

Why has the price dropped? If it is a profit warning I sell straight away. But that is me.

I am also looking at charts a bit more, is there heavy volume on a down turn, is some sort of trend line broken. Is there somewhere else better for my capital to be than a looser?

And all stocks are volatile ;) http://www.stockopedia.com/content/choosing-where-to-put-a-trailing-stop-loss-to-avoid-being-stopped-out-quotunnecessarilyquot-163051/

underscored

9th May '17

PS read the comments on the articles, the standard of discussion round here is pretty high and civilised.

Howard Marx

9th May '17

To win the game, you sometimes just need to spot the weakness of the opponent.

For private investors, the opponents are the institutions who, because they hold 90% of the shares in most companies, tend to set the share prices of most companies.

The institutions most obvious weakness is clear. Short-termism. This is a result of them being judged on monthly &/or quarterly performance.

So if you can have a longer-than-3-month time horizon, you have an advantage over the myopia of institutions.

My action is simple. Clearly there is no point in buying shares in companies that are in terminal decline. But if a company has problems that are:
* temporary
* quickly solvable, &/or
" cyclical

.. then I will be open to the idea of buying (or holding if I held before).

Just my view, of course!

willhampson

9th May '17

For what its worth, I've noticed over the last month or so that a number of high momentum stocks have been slowly walked down on the back of no news, sometimes as much as 40% (e.g. Sopheon (SPE) and Gear 4 Music (G4M)). Right now there appears to be a similar attempt with Burford Capital (BUR). While a pull-back from a recent high is to be expected, due to profit taking for example, I found the extent of these drops quite surprising. Perhaps the market is in a phase.

The approach I take is that if the story remains the same as when I invested, then I will stay invested. So if a stock drops on no news, as opposed to a profit warning, I will hold. I believe this tends to pay-off in the long term. Going back to the examples I gave earlier, you can see this with the recent recovery of G4M. Sopheon also appears to be rallying today, and I hope it will hold. Just my two cents, and hope that helps. The market acts very strangely at times...

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High StockRank with changing technicals to bearish

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Minnow

6 comments

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