As a technical trader it humors me to read between the lines at times, those lines being candlesticks, and entertain the idea that somehow for the average trader news can come before price motion. While I’m sure that sometimes it does, illegally, I believe it is possible to call turning points in stocks without any information but the price of a stock. Why would any of us have the kind of priority to news that would make a stock move anyhow. Anyone who calls stock picks on news alone, is either close to the “know” or late on the call.
What has been happening with Leap Wireless for many years is a correction, not lack of news information. That said I’m not sure the correction is quite over, to the penny. It is obviously close or the 11.98 low will be taken out. This latest news could have coincidentally occurred near a turning point, at least that’s what happened last time LEAP turned after the 11.98 low. Bloomberg, on November 20, 2009, called into question the same rumors of mergers right after earnings and right after LEAP disclosed it had no intention of a merger on it’s conference call.
The stock ran 60% from the first call of merger even after it was dismissed. LEAP has made a run from November to May the past two years without any merger talk. Check this post for duration analysis of LEAP. I expect LEAP to trade higher. Whether the latest news or news to come will effect that is consequential, but it is not the largest force behind the price of a stock. A stocks price motion has just as much to do with its price history as it does its present moment in history.
A stock trades tic by tic every day. News on a security does not. If there was a news flow that captured the decisions of buyers and sellers at the most basic time frame and provided that for traders in real time… then maybe that news would be worth listening too. Thats right, we already have that, it’s called price motion and technical analysis and it will always accommodate market news.