I’ve seen moves like $PANL ahead of news and or buyouts before:
As much as you want to think there is a level playing field for traders , there isn’t sometimes:
1) you get insiders that share information (oops thought they never do)
2) Lawyers / Accountants that share information
3) Analysts that get tipped off on deals like this
4) Upgrades/Downgrades are known ahead of time ( is that info shared?)
5) SEC who is to regulate this type of trading doesn’t have enough man power to go after all them
6) You could complain & say “Geez I don’t know any insiders , how can I get in on these big gaps”
Not Much you can do about the information being shared but there are things you can do as a trader
Rather than get upset when you miss a trade like $PANL here’s some tips that have helped me:
1) I use to scan for unusual trading volume – May do so again since companies have so much cash on hand and we may see more partnership deals and/or do buyouts on these discounted stock prices.
PANL had unusual volume yesterday Aug 22nd , 2011 over 4.94 million shares traded hands ( usual volume is 1.25 million)
Block Trades, insider buying are also a good source of info that you can easily get through most online brokers & or Yahoo Finance.
2) You can see how well $PANL held its gains yesterday. It also broke thru the 20day sma strongly on a bullish engulfing candle yesterday – Usually a good sign the run up continues higher ( next key breakout would have been the 200day sma which it gapped right thru today)
3) I would also look at PANL competitors as sympathy movers and/or other potential companies that competitors of Samsung like $IBM $HPQ $DELL $CSCO will partner up with – These take a bit more work but here are some examples today: $INVE $RDCM $MITK $AUO $INVE $RDCM $MITK $AUO $ZBRA $SYNA $EFII are all up today — INVE is up the most on this list over 24%
PANL is in the Computer Peripherals sector so easy to find competitors here on Yahoo Finance: http://sg22.ly/qBEz3T
4) I also use key levels for upside targets on those stocks and/or a stock that you catch like PANL a head of time . So the 50% retrace from the April highs to the Aug lows takes us right to the $43.15 area – We went just over that this morning & now retraced back to low $41’s. You can also look at these types of gaps as good intraday plays but keep a tight stop in case you start to close part of that gap. A bit more risky play but using key Fibonacci retracements and trends is something that I’ve also found helpful.
5) When I caught that nice $DNDN trade in 2009 for over $100k overnight http://sg22.ly/qT5HXi (I only had an avg size position for my account size ) but what kept me in the trade was the unusual volume I saw the day I bought it. A bit of luck but also a bit of intuition from trading I had seen happen in the past.
So stop getting upset about stuff you can’t control like insider buying or tip offs – Find out what you can do next time to try and catch a move like PANL before it happens.
Here’s a chart below on PANL