Mesa Air Group, Inc. (fka MESAQ)

[Wheeeeee]

yeah strong reversals often happen on climactic moves. Much like a pump and dump buying spike you can invert the concept for a downward spike. That leads to tails on the chart. That also leads to side effects on a number of technical indicators such as stochastics. Look at the formula behind stochastics and think about how a tail affects it. A tail is a candle that has a relatively high open and close on the candle and a very long line below the close. Kinda like a christian cross.

particularly involving tails:
Alot of technical indicators use close values of candles.
Charting often uses highs and lows.
There are situations where climatics lows (of tails) lead to a downward sloping trendline while charting(when drawing on the lows/highs). But the indicator that uses the closes might give a more flat or even up line. This leads to divergence.

addition:

also think about the market maker wants. He wants cheap shares. Also keep in mind that the opening price of a stock is not some logical result of some trade. They chose a price - often related to orders in premarket which will be executed on open. So when you are bullish on a stock you can get cheapo shares when the stock gaps down.
This low opening, and being close to a 'round number' (in this case 0.130 since we are in a sub penny range) will lead to more pain and anxiety in holders. When such a support line breaks it will trigger stop losses and manual sell orders.
Smarter traders will be there holding a basket to catch the shares that peeps toss at em.
This is why climactic sales are so interesting (unless there is a real reason ofcourse (saytam a few months back)).
Just chek how much volume was slammed through in one candle on the first 0.13 break down....

What works against us atm is that tehre is no momentum in airline stock atm. That might make the stock a bit more news dependent. We will just have to see. At some point we get choppy, i'll flip a few pennies. Besides that there is more money to be used to average down. (unsafe stategy!)

I am bullish biased so my posts are prolly too optimistic.


reaction to rjblue: http://www.stockshaven.com/reiterating-buy-on-mesa/