You do not have to go far on social media to see it.
Someone posts the cashtag. Then they post the fundamental results of a former AI leader. Then they are taken aback by the price decline.
Every time.
Either they want the engagement or they are genuinely confused. Usually a bit of both. But here’s what they always say:
“The market mispriced this.”
“The market got this wrong.”
They can see the numbers. Sales. Margins. Growth rate. Return on equity. Cash flow. They cannot square that with a red day.
The concept that would save them a ton of money is simple.
The market is never wrong. Opinions are.
There is no law that says a blowout print has to be bought. Demand can dry up for a lot of reasons that have nothing to do with whether the quarter was good. Theme. General market. Something inside the company that is not in the release yet. An endless list.
Those things take time to show up in a filing. They show up in the price first.
Buy with both. Sell with the chart.
When I buy, I use fundamentals to filter the list. Then I use the chart to time the entry, in a spot where I can keep risk defined.
When I sell, I do not wait for the fundamentals to catch up. By then you can be out of business.
I sell on the chart.
Credo is a recent example
Credo reported this week.
131% earnings growth year over year.
115% sales growth.
31% growth in return on equity.
Those are the numbers that get me interested in a growth stock. Those numbers are bonkers.
The stock had already found resistance at declining moving averages at the end of August. After the report it gapped down 20% and closed below the 200-day. Today, Thursday September 3rd, it found resistance at the 200-day again and closed lower on a day the QQQs were up 1.2%.
There’s a message in that.
Also, I want to be clear, this is no knock on Credo as a company. I’ve traded the name in the past, and I'm sure I will trade it again in the future. It just needs time to consolidate.
How much time? Who knows…
You do not sit underwater and wait for the story to fix the chart. I have it up here at 47% off the all-time high. That high was June 22nd. Not even three months ago.
You do not wait for that.
You sell broken support. You sell when institutions are not stepping in. Those are the signals. I laid them out here:
3 Sell Rules That Have Kept Me Alive in the Stock Market
The tape had the news first
There is a scene in Reminiscences of a Stock Operator.
The president of the company is on record. Everything is fine. Livermore is looking at the price and something is off. A few days later the board skips the dividend.
The tape had the information before it was public.
That is why the sell is technical. Credo is just today’s version. This is not rare. It shows up constantly.
Price is what we get paid on. Worry about that first.