CMGI
Inc (NASDAQ: CMGI)
Market Call™ for December 17, 1999
Contributed by Mark Seleznov, TrendTrader.com.
The purpose of this Market Call section is to
educate readers in technical analysis patterns and indicators. As with all investment
information, you need to research information and consult your financial advisor before
initiating any strategies that are contained in Market Call.
Also, you must realize that as with all trading strategies,
opinions can change quickly depending on market conditions and developments.
This column tries to present historical examples, potential set
ups, and examples of entry and exit strategies.
"Over reactions to News and Earning Reports"
I am always fascinated with the reactions to news and earning reports.
Newspapers and magazines like the Wall Street Journal, Barron's and
Investor's Business Daily can move markets. The earnings of companies
including Whisper Numbers and The Whisper Numbers of companies can really
move a stock to unsustainable prices.
The last one in or those who just emotionally Buy a stock on news can be
hurt. This is true when there are a flood of market orders at the open. The
specialist or Market Makers will intentional open the stock extra high to
bring in sellers. These Market Makers have to take the other side of these
market open trades and want to be sure they can Buy the stock back cheaper.
Let's look at CMGI, Inc.
After the market closed on December 15, 1999, CMGI reported better than
expected earnings. This is a positive for a stock and the stock may open up
higher the next day.
Both after the announcement and in pre market trading today, CMGI had
frantic buying with the stock trading as high as 241 in pre market trading.
Regular trading had CMGI open at 240 and that was the high of the day.
The stock closed at 221 9/16, near the low of the day on larger than normal
volume
This formation where a stock opens with such a large gap and then closes
near its low is considered a negative technical pattern.
Think about it, all new Buyers of CMGI are losing money on their new
purchase today. This is especially true of those that bought in the first
hour.
I feel that CMGI will have resistance back to the upside and I am more
concerned about a continued decline in the stock.
If you are long, place a stop. A drop tomorrow may cause liquidation as
fast as the stock went up.
Trading off news can be hazardous to your health and pocketbook.
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Call Information
Mark A. Seleznov is a General
Securities Principal and Managing Partner of Trend Trader, LLC, a NASD, SIPC broker/dealer firm located in
Scottsdale, Arizona. A professional trader for over 25 years, Mark was a Market Maker on
the Philadelphia Stock Exchange, a Retail Registered Representative, and futures trader.
Mark is an author and recognized expert in equity Day Trading. He conducts seminars in
Equity Day Trading and offers his firm traders training and support. If his firm holds any
positions in the public companies he writes about, it will be noted at the bottom of his
article.
Market Calls is a daily syndicated column on trading by Mark A. Seleznov, Managing Partner
of Trend Trader,
LLC. For information on obtaining Market Calls for your web site,
newspapers, or publication, contact Trend Trader, LLC at 602-948-1146
Disclaimer: Trading in securities may not be suitable for
all individuals. Consult your broker or other professional to determine your suitability.
This is not an offer to buy or sell securities. The advice given above is of a general
nature and should not be taken as a recommendation to buy or sell the referenced security.
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Last modified: March 17, 2001
Published By Tulips and Bears
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