Pretty easy answer - momentum. The money flow is designed to split smart and dumb money. They take the change in stock price after every sale and multiply it by the volume. So the market makers may get a few large sales that lower the price - however, there is still the rest of the day to account for. During this time, momentum retail traders are buying in small lots. With no heavy selling to offset, the market makers have to take the price higher. At the end of the day, you have 90% of the trades being small buyers and 10% being big sellers - the stock goes up.
Wow, some here seem to think IBD is a cult religion or something. I have seen stocks IBD wrote major articles on plummet one month later as the diluted their stock or some major negative event happened. Either IBD was in cohoots with some hedge funds, or they were extremely gullible and printed what some guy with an agenda gave them. Either way, use IBD as a data source--knowing that a lot of the data points are wrong.
I cleared a double bottom pattern and was rated to be within 5% of break out point as published in Investors Business Daily on Friday. So, all of the IBD readers who buy on momentum bought it the first day after the buy signal was given. I tried to buy as well but it gapped above my limit order. Look at the volume it tells the story.
Thanks for the intelligent reply, bejing5. I don't see enough of that on these boards.
I have subscribed to IBD for 16 years and have found that breakouts fail more often than they succeed. My own screens flag many of the stocks that later show up in the IBD 100, but I prefer to buy them before they break out of a base, which means I already have a 30% gain at that point. I agree that you get burned badly buying IBD's top-rated stocks in a downturn. The same is true for ValueLine's top-rated stocks. Even multiple 8% hits can chip away at your annual profits. What I find useful in Mr. O'Neil's methods are his sell strategies. Knowing when to sell so that gains are optimized is harder than knowing when to buy.
True, HITT did breakout of a double bottom and, true, IBD did have HITT with a black border which can be a very good omen, obviously.
However there is something more at work here as HITT moved over $3 last Thursday, June 29, several days after it moved off of the double bottom and PRIOR to the IBD weekend publication. There is something much more bold behind this move the last few days. Anyone hearing rumors about takeover or mergers????????????????????
A description of a technical event is not a reason. The question is, "Why?"
The "ibd black border" response from merlinsnickers makes no sense. The volume says there is something significant happening.