When Dell announced their acquisition of Perot Systems for a few billion dollars on 9-21, Perot stock bounced up over 11 points, Dell stock dropped about a point and the tech sector breathed a huge sigh of relief. Is the tech sector poised for a huge comeback? As the Dow flirts with 10,000 yet again, and the NASDAQ holding steady, the tech sector is looking for a few tipping points to make a bull run of the market.
That tipping point just may be Facebook going public. You know Facebook, chances are you’re on Facebook and you know how it’s impacted the country. (Friend me). Hours are spent on the site with people reconnecting with old friends, and building new social networks. And now, Facebook has just passed a business milestone. They are breaking even financially, which means they may be primed for an IPO. A Facebook IPO would be the shot in the arm that the tech sector needs.
Now how does that affect the everyday swing trader?
It shows how you should use the headlines to establish a trading PLAN and then work the plan. It also shows how invaluable insider trading is when it comes to public information. Does insider trading occur? Undoubtedly. To state otherwise would be like saying that politicians got into politics to help people. I’m sure that sells to the crowd in the middle (that’s us folks) but let’s face it, the dinners, gifts, trips and campaign contributions from lobbyists help. So how can you get inside information to help with a trade? You read the headlines.
If one company announces they are going to purchase another company, buy your stock and set your exit strategy accordingly. Will they all pop over ten points in a day? No. Will some drop? Sure they will, but you can set your insurance for protection. Will it always work? One way you can check is to scour past financial headlines for news acquisitions and plot the stock jump based on the announcement. There are probably computer programs out there that can do this for you as well, but take the money you were going to spend on the program and buy a companies stock. You can use headlines, you can use news and you can use research to create a very profitable profit plan for your swing trades.
