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Zero to 60mph in 2.6 seconds is risky for stocks, too. – If, Then… Market Timing

Zero to 60mph in 2.6 seconds is risky for stocks, too.

I”m having difficulty getting this message board quote out of my mind: “How does FITX go from 11.4 to 6.3 cent in 4 weeks?” Perhaps that”s because newer developments give the quote new meaning.

Yesterday I quoted this when the stock had extended its dip to 4 cents. My point then was that while the question was probably genuine, it was one-dimensional. A price chart going back only two months shows the stock rallying from 4 cents. And much lower before that.

Elasticity. So, one answer to how a stock can fall so dramatically is to review whether it can also rise dramatically. Stock prices are not uni-directional. They are a product of the people trading them. And if those people”s recent history includes wide ranging price movement in one direction, then they are quite capable of producing it in the opposite direction, too. I call this phenomenon “elasticity.”

Not to belittle actor Paul Walker or to exploit his untimely death. But we can learn an otherwise obvious lesson from his tragedy that faster and fastest acceleration can be painful upon decelerating. Take appropriate steps to avoid participating in that stage of ride.

So, what exactly brought the FITX message board quote back to my mind? Yesterday”s close. After dropping intraday to 4 cents, the close recovered to 7.5 cents. After reviewing its message boards, I was unable to find anyone dare questioning how a stock could go from 4 cents to 7.5 cents in 4 hours.