Trading a stock after a fundamental event is announced in the after hours can be seductive because of the huge moves which often follow such an event. Price movement happens very quickly which is why you need to be extra disciplined if you attempt to trade in this environment. It is almost funny how many shares trade in moments after a company reports earnings. Funny because the big money funds are supposedly smart enough to analyze an earnings report in 10 seconds and then commit millions of dollars of the public’s retirement money to a “solid investment” for their future. No one can properly analyze a balance sheet, earnings statement, etc. that quickly with any accuracy. The fact is, the after hours casino is ruled by emotional decisions to headlines. That is the game….charts allow us to plot those emotions and try to determine where the buyer and sellers are likely to congregate so we can find what looks like a low risk entry point and also ascertain where we should bail on the trade if it looks like we are wrong. After hours trading is very similar to the recent trading in shares of Chinese stocks, it is emotionally driven…very little to do with fundamentals. This type of trading is clearly not for everyone, but I like it.
eBay Inc. (Public, NASDAQ:EBAY)