On October 25, 2017, $BONT surged from $0.33 to $0.73 in one afternoon on news announced at 3:15pm EST, 45 minutes before market close. A share that had traded less than 200,000 shares on the day went on to trade just over 10 million times that day.
The two news articles about the company prior to that day were less than positive:
October 13: Walls Caving in at Bon-Ton Stores
October 17: Negative News Is Killing Sears
Basically, from what I understand, they have implemented the refinancing strategy that their advisor recommended. I am only a 4th year business student at the moment but that doesn’t seem like they have found a way to increase their revenues.
The next day (October 25, 2017)
A premarket news article titled Lifeline for The Bon-Ton Stores was released and all hell broke loose.
$BONT surged to a high of $1.35 at 1:07pm EST as 10s of millions of shares are traded back and forth before falling off the horse and crashing back down as shares of a nearly bankrupt company probably should.
In follow up to the question on my $BONT screenshot, I would say this is a good time to short this stock if I had not done so already.
- Executives will try to spin any news release positively
- Don’t bite the bait, instead react to the positive reaction to the news
- 4 minutes after the news was released, the lowest low was higher than the highest high of the minute the news was released and the days trading volume had already doubled
- A news article published, a greater low than the high and a surge in trading volume all within a very short period of time are three flags that could prove to be very profitable.
- Even if you are cautious and wait for the stock to rally from it’s first dip and buy it at $0.47 and sold it near the top of the next peak at $0.70, 8 minutes later you could have profited 49%.
- Even if you miss the peak 8 minutes later and you sell it 10 minutes later for $0.60 you would still profit 28%.
- Over 1 million stocks where traded in the first minute of the next day (October 25) and the share soared to over $1.00 in 2 minutes.
- Theory: Mainstream traders pick up on the stock over night, they are the excitable ones and want to get in on the stock the minute the market opens, this drives up demand and the price rises.
- Buying at the first big dip, holding it over night and selling into the morning spike would give you a 40% return
- If you shorted this stock after the 2nd big crash at $1.06 and covered at $0.94 you looking at another 13% within 25 minutes and more if you hold upwards of an hour and even more if you held until end of day
- From $1.06 to the end of day (EOD) only ever rallied as high as $1.09 which is less than 3% and should not be enough to set of your mental stop loss
- At the point you could have covered it EOD for $0.85 and earned 25% profit
- That is 4 opportunities to out perform almost every mutual fund in existence and with 73 million shares being traded during this frenzy this opportunity is profitable for very small up to really quite large personal trading accounts.
Look at other super novas and big runners as of recent and see if the three flags present themselves at the beginning of other runs