Chart Source: Poemsview 14th Oct 2020
Medtecs released a blockbuster results last night which made a lot of traders excited awaiting the opening this morning. Net profit was up 111,466% which might make everyone rush in this morning. True enough retailers tried to join in the ride in the morning which looks promising until medtecs came close to the resistance of $1.60. From then, it got sold down rather quickly. Medtecs closed 8% down which might seem a little odd for such an impressive results?
Let’s analyze a little deeper and see what we can learn in order to avoid such a situation in future.
- Price ran before results. From the chart, we can see that medtecs started to run monday ahead of its results. Looks like a case of selling on results. Like buy on rumors and sell on news. It is understandable that traders were scared to miss out and wanted to get in at whatever price.
- Were traders expecting good results already? It is not much of a surprise that glove makers, PPE/mask makers would be reporting a good set of results.
- Take note of resistance too. Just because they reported a good set of results, it’s still important to watch out for resistance.
It is also always good to seek a second opinion if you’re unsure and we’re glad to share our two cents worth. We’re glad we didn’t chase this trade and shared with our clients regarding this trade. Also buying ahead of results is always a gamble as results could swing both ways and also if market had already priced in the expected good results. We don’t really advocate holding for results unless you are very aware of the risk.
Let’s look at Medtec from a technical perspective. It is still above the short term uptrend line, the resistance is around $1.60. First Support at the 5ema then $1.20 at the uptrend line which is also the 50ema.
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