3 Ways To Know When To Sell The News

How many times have you heard the saying, buy the rumor and sell the news? What this saying really means is that the good news is already factored into the price of the stock at the time of the announcement. Just think about how often we have seen companies report terrific earnings, only to see the stock price decline sharply after the earnings announcement, it happens all the time.

Here is a slightly different example, do you remember the Federal Reserve announcing its $85 billion a month QE-3 program in mid-September 2012? The major stock indexes were soaring into the day of that announcement. As you all know, the stock market staged a two month correction after the announcement.

Obviously, the secret here is not really a secret at all, the institutional money just figured that all of the good news was baked into the cake already. Remember, before the QE-3 announcement the stock market indexes were surging higher on the anticipation that the central bank would continue its easy money policies.

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