for Celgene (CELG) today. I covered my short position this morning at 39.15 (nice gift)and the sketch below is an approximation of how trading could occur today. This is a pattern I have observed in many stocks which gap lower on news. Keep in mind that it is not a prediction of what will happen, but a possible scenario. It is likely that I will be trading this stock aggressively if the stock trades similar to what I have outlined.
1-Gap lower, people rush in to buy sending the stock higher
2- that rally fails to hold and the stock then experiences a drop to new lows on increasing volume.
3-The stock the experineces another small bounce
4- which fails to hold and sellers re emerge to take prices to a lower low.
5- This low occurs on lighter volume and is often the morning low which holds.