Why LEDS did not move today, imo
If you have watched many stocks before that pulled back this much on earnings, you end up seeing the same usual pattern : flat chart for the entire day.
Why is that ?
Well, here is my theory.
A stock down 20%+ on report will attract a lot of attention, the "easy" trade would be a recovery, but hold that thought...if it were that easy, everyone in the market would have bought LEDS today and banked by 10:00AM.
That was not the case...well, nothing is that easy, otherwise, what's the point of a challenge.
The main reason why these kind of stocks remain flat no matter how attractive the charts might seem is because they make too much money for the broker dealers who are pocketing the spreads (bid/ask) from people trying to bet on this correction.
If its going to take 30 minutes for the stock to ramp back up, it won't take that much volume and thus, the broker dealers won't make as much on the spreads : the neat trick is to keep it flat, give a couple head fakes to bring in some volume, bring it back lower, force people to exit, get fresh meat trying to play the bounce...wash rinse repeat from 9:30AM to 4:00PM.
The result ?
LEDS avg daily volume : 500,000 shares
LEDS volume today : 6,000,000 + shares around the close
The math is simple...clearly the idea would make more sense to pocket the spreads @ over 10x avg daily volume on hopeful traders looking for a bounce rather than have an actual bounce which would not have resulted in as much volume as the stock did today.
My $0.02, seen this many times over.
YAK.
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