Volatility=Profits for News Based Traders
Yesterday marked a dramatic continuation of last week’s pullback, with the Dow losing more points in a single session than at any time in its history. After a year plus run with a bull market that demonstrated eerily little volatility, the return to a volatile trading environment appeared to spook some investors.
Volatility will only help news-based traders, however—the lower the broad correlation between all stocks, the higher the differential margin between market averages and equities boosted by individual news events.
Today, markets started the day off down but posted a quick rally that seems to be losing momentum as the day wears on. Volatility is back.
Fabrinet is an advanced electronic manufacturer focused on “advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products.”
Their stock has had a very nice 24 hours on the tail of multiple positive news events. After the close of yesterday’s session, they posted earningsn for Q2 2018, beating guidance on both revenue and net income. This announcement was followed by an announcement of plans for a substantial $30 million share buyback initiative.
Needham & Co., a top financial analysis group, actually downgraded their price target for the stock today, from $45 to $40. That price target keeps the stock in “strong buy” territory, however, as it currently trades just under $30/share.
Once again, positive news easily warded off broader negative market momentum: the stock is up around 23% since the original earnings announcement yesterday afternoon.
Diverse Plays, Great Profits: All in a single news day.
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