FA vs TA

In after hours trading yesterday, I spent some time evaluating (digesting) the YOKU earnings release. I did not know much about the company up to that point, but was interested in playing the reaction to the news.

What I found was a classic example of a situation where the Fundamental Analysis of a company was not matching up well with the Technical Analysis results (the chart).

I did receive several enquiries via twitter as to what my thoughts were on the stock, but admittedly I was too hung up on the FA results to have a clear enough picture to trade the stock after hours. After further review this morning, it is clear – the chart tells us what everyone collectively thinks.

Although the stock did experience selling pressure last night and in to pre-market today, it is has shown great resilience in retracing most of the gap down move back up.

Clearly the thing to do here was to simply “Trade what you see, not what you think”. So noted.

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