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Xinyuan Real Estate Co., Ltd. Message Board

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  • hageneriksson hageneriksson Oct 19, 2012 4:56 PM Flag

    What's the Cause of Today's Volume and Price Spike?

    I also attribute the move to the news mentions of the Brooklyn land purchase. Also I presumed that the Blueridge guys might have been already off the desk for a long weekend and might very well be back on Monday.

    Other possibilities include an upcoming positive seekingalpha feature or good company news - the latter sounds highly unlikely to me, but if they e.g. struck a deal with Blueridge over the remaining shares this would send the stock soaring of course.

    Don't forget that today's strong trading pattern and the huge volume will make the stock show up on many lists used by short term momentum traders (like me for example). The stock was exceptionally strong today on 4x average volume, broke the $3 "psych" level and finished at day highs on an otherwise very ugly day for the market. I guess these are the right ingredients for some follow through on Monday morning - hopefully the Blueridge guys will prolonge their weekend until Tuesday. :-)

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    • @hageneriksson, thanks for your excellent post. My own current view squares with yours, that the primary mover is probably the back-to-back news mentions, Bloomberg on Williamsburg, and TheStreet on Bloomberg.

      XIN's trading history in the past on news mentions (at least for non user generated news like SA), has been a quick spike followed by a quick, but not quite so quick retreat. Of course, prior behavior's no guarantee know the drill.

      I like some of your other potential explanations, as well, thanks for your thoughts. A couple Q's and comments:

      1. I agree a deal struck with BR would give upward pressure to the stock price, but to move the market, wouldn't have to become public knowledge? Have you heard any rumors or anything to that effect?

      2. Excellent point on the "one day's news mention begets the next" thing. I actually call that the Daisy Chain effect. One news outlet runs a story and its competitors read it, then they run one, then maybe another, etc., causing a bigger and bigger spike on thinly traded stocks like XIN.

      It's impossible to guess which day will see the last news item published, but the higher the spike, usually the more money to be made on the downside after that spike.

      3. Do you mind if I ask your current XIN position? I'd definitely benefit from a momentum trader's insights. I went from all cash to short XIN today at the close.

      I'll also bump forward a thread from the last time a series of news items spiked XIN's price, in case you're interested in XIN's past trading patterns for news item mention reasons. I think it's called something like "Advice From XIN Investor" or something like that, from April, when XIN spiked to $3.95.

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