Just take a look at local market, Bursa Malaysia (formerly known as KLSE) – you’ll notice some counters shot up without logical explanation and some will experienced freefall all of a sudden. Rumors play important part, when greed wins, stock(s) will goes up whereas when fear wins, stock(s) will goes down. It’ll be interesting to see how the market will behaves once “short-selling” re-introduce later on (short-selling was discontinued during the 1997 Asian Economic Crisis) into KLSE.
It’s the same with Wall-Street or better known as Dow-Jones – noticed how a particular stock decided to jump off the cliff (gap-down) for a free-fall instead of the expected gap-up even though it announced earning which beats all the consensus by wide-margin (be it eps, sales turnover, net-profit etc)? Just because the majority funds (big-boys) missed the boat, they dump whatever they have left to the market (to scare the head out of small investors) in order to buy back later at lower costs. Alternatively they announced their “skepticisms” hoping the stock will fall so that they can scoop the stock at a cheaper price. Small players can never beat all these market makers, regardless whether the game is shares, options, ETF, futures etc.
Small investors have been searching and testing various methods to find the holy-grail of a perfect profitable system from the market-place – what will it takes to make a profit? Technical Analysis? Fundamental Studies? Gap-Analysis? Luck? Discipline? Psychology (fear & greed)? A trading plan? I guess the answer is all of the mentioned.