Buy the rumor, sing the blues


The old phrase, “Buy the rumor, sell the news”, is one that gets the best of every investor at some point during their time in the market.

You know how it goes.

A rumor circulates… the share price gets pumped…

…and then the news hits.


That’s likely to be the case for a stock that I recently took a small position in for observation (less than 50 shares).

I do this often for psychological reasons. When you see the swings of a stock’s share price on a daily basis, you get a feel for its personality.

Now, the company is ostensibly a takeover target for State Street, but this is highly speculative and the CEO continues to deny the rumor…

Take a look at Credit Suisse Group (CS):

We’re looking at the daily here and, as you can see, it’s been rough for CS.

The trend is still down for the time being, but if there’s any truth of a takeover, things could get interesting…

I’ll trade options to cheapen my position for now.

In terms of Support and Resistance, there’s more of the latter with only a thin green support channel above the white arrow… $6.00.

The Squeeze 4-Pack Beta and Squeeze Trading Tool 1.0 built by Chris Hood are showing a slowdown in momentum as noted by the single green dot and curved white arrow.

Just a few days ago, these tools signaled to go short…

Sure, the RSI and MACD are trending higher, but frankly, I trust Chris’s proprietary indicators more.

(Click this link here to see how ridiculously accurate they are.)

The past two days have seen massive selling volume which is something I see often in scenarios where a turnaround happen, but I’d be careful with an economic calendar full of catalysts.

The next stop is $6.00 and, if this fails, I’d watch to see whether or not the trendline holds strong…

I’m in small, so I’ll be watching for news to add… if there’s any news at all.

Keep moving,

(Disclosure:  I am long CS and intend to add a short position in the next 30 days.)

This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.

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