When I was learning to fish on Lake Simcoe, my dad would spend all his time looking for certain rock piles or underwater trees. He had some favorite spots that were passed on by Indian guides and he was determined to pass them on to me.
The idea was to catch fish and I learned that early. There was no reason to roam around the lake or be lured to try other spots. Until the fish stopped showing up, we were creatures of habit ourselves.
The Stocktwits Blackberry $BBRY stream has become a fun place to watch as a big crowd develop. This happens all the time on Stocktwits when a stock has a lot of volatility and press coverage.
To me, it’s an easy sign to stay away.
TV and media act the complete opposite way. They cherish the fisherman hovered over one spot. They feed the traders more news on the stock with the most attention…24/7 earnings coverage and product coverage.
The great stocks rise with little coverage and few that understand or believe in the catalysts. They are just overbought, extended, too expensive and appeal to too few people. They are hard to own. Biotech and software stocks come to mind with Netsuite ($N) and Biogen ($BIIB) being the poster children. I am guilty of missing these two stocks myself, but am determined to find the next batch because the pattern repeats in the stock market.
This is how great investors and traders learn to read the tape. There is NOTHING wrong with what I am seeing, it just helps me read the tape. The flash mobs around tickers means something. If the mob is right and something really important is happening, Blackberry in this case will emerge from it’s $13-$17 range and likely make a sustained move. The traders will hop off and the institutions and trend followers will hop on.
In the meantime, I am tending to some big trends, licking my wounds in some trends on the verge of ending ($AAPL) and hunting for more signals in the tape.
That’s my job.
What’s beautiful about the Stocktwits tape is not only does our tape work in the way that the original ticker tape worked, but we have the added context of the people and their activity. We get to look in on what the people that make the tape are doing and talk to the like minded or opposite minded investors and traders that make the tape happen. It is the easiest way ever to learn and find mentors that will speed your own learning and style.
I am not a Stocktwits member but Mr. Lindson made a simple to the point statement all Traders/Investors could learn from to be consistently successful “Fish Where The Fish Are”! My personal view of Traders vs. Investors is nothing but time frame exposure to market assets, obviously a little different than Mr. Lindson’s view but overall we speak the same language.