By Kris Sayce – Port Phillip Insider (Australia) –
Signs, signs, signs.
We’re always looking for signs.
A certain type of sign in particular.
That is, a crash warning sign.
We’ve seen them before. They come and go. Some turn out to be valid. Others turn out to mean nothing at all.
But aside from all the usual, fancy signs, such as the ‘Death Cross’ and the ‘Dow Theory’, there is one sign that beats them all.
The sign in question?
The finance industry has a habit of making things appear harder than they need to be.
The average analyst research report or company annual report has more jargon in it than a duck has feathers.
But when it comes to analysing a company, there really is one aspect that’s more important than anything else: profits.
Ideally, you want a company to make a profit. Even better, you want the company to make a bigger profit than its last one.
But what you don’t want to do, in the world of the stock market, is to make a profit that’s less than the market expects. Because as Amazon.com Inc [NASDAQ:AMZN] discovered overnight, the market doesn’t take kindly to that happening.
The following is a one-day chart of the Amazon.com share price. The price action to the left of the red line shows the stock price during regular trading hours.
The price action to the right of the vertical red line shows the stock price in ‘extended hours’ trading. As you should be able to tell, the price fell — heavily — by 4.22%.