Fear and Greed

Ever wonder why a stock rises or falls 8% in one day with no company news? An 8% is a damn good move for one day, up or down. You can make a ton of money on 8%.

But when you actually think about it. NVDA gained 8% on no company news. NVDA is the same company it was yesterday, yet it was down 2% yesterday.

When you think about it? This actually makes 0 sense.

So what actually causes a stock to move 8% in one day…or move at all when nothing has changed?

There is only one answer: Emotions.

Short-term price action is a result of fear and greed and nothing more.

When a stock is rising 4 days in a row, traders and investors rush in as FOMO sets in.

“What if this is the next AMZN?”

It’s going to keep running. So buyers flock in. The opposite is true when a stock is falling. “What if it goes to zero?” Now people can’t sell fast enough.

This is one of the most valuable bits I have learned about the stock market from Gerald Peters.