So-called “bull traps” often frustrate traders, as they did on Wednesday, snaring shares of SIGA Technologies Inc — and there may be another one today.
SIGA shares have been very active because of a surge in Mpox (The World Health Organization ceased using the term Monkey Pox in November 2022 to reduce the stigma and association with monkeys).
Read Also: Emergent Biosolutions, Bavarian Nordic, GeoVax And SIGA Technologies Shares Are Making Big Moves Thursday What Is A Bull Trap?
Resistance is a large group of traders and investors who are trying to sell shares close to the same price.
If buyers enter the market, they will have a difficult time finding people to sell shares to them.
As they did on Wednesday, when shares of SIGA Technologies Inc. were snared, so-called “bull traps” frequently irritate traders. There might be another one today.
It’s our “Stock of the Day” for that reason.
Due to an increase in Mpox, SIGA shares have been extremely active (the WHO stopped using the term “monkey pox” in November 2022 to lessen the stigma and association with monkeys).
SIGA creates medical interventions for this illness. On Thursday, August 22, the New York-based company revealed depressing trial results for a medication to treat mpox. 15, resulting in a nearly 20% decline in the stock price. But it rose more than fifteen percent on Friday morning.
Additionally, see Emergent Biosolutions, Bavarian Nordic, GeoVax, and SIGA Technologies’ stock movements on Thursday.
A bull trap is a financial strategy that resembles a false breakout. It appears as though a stock will break out and continue to rise. However, the buyers were swiftly overwhelmed by the sellers, who drove the stock back below the resistance.
A sizable cluster of investors and traders attempting to sell shares at or near the same price is known as resistance. The chart shows that there has been resistance for SIGA at about $10/point.
Occasionally, a stock will turn around and head lower when it hits resistance. With SIGA, this occurred in late July and early May.
This happens when some of the individuals who used their sell orders to create resistance start to worry that other sellers will undercut them. They are aware that purchasers will choose the vendor who is prepared to offer the best deal.
As a result, they lower the asking prices they will accept. As other sellers become aware of this, they follow suit. The price is pushed down as a result of the snowball effect.
But occasionally, the stock “breaks out” and rises over the barrier.
A bullish dynamic may be indicated by breakouts. It might indicate that investors and traders who put up the resistance by placing sell orders have either completed or canceled.
This indicates that a sizable portion of the share supply has been used. It will be challenging for buyers to locate sellers of shares if they decide to join the market.
They will therefore have to raise the amounts they are prepared to pay, or else the sellers will lose interest. The shares may be forced into a new uptrend by this price action.
Occasionally, when the shares trade above the resistance, a breakout appears. It is, however, a “head fake.”. Simply put, the sellers have been inactive.
Returning to the market, they subdue the purchasers and drive down the price. We call this a “bull trap” or “false breakout.”.
However, astute traders can frequently benefit from these dynamics by switching from long to short positions. One effective contrarian signal is the bull trap.
Substantial declines typically occur after them. SIGA might be ready to go into a decline.
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As traders jump on the rate-cut train, gold prices hit an all-time high of $2,500 on Friday. Mining stocks were moving.
Photo courtesy of Flickr.
