4.13 TRADERS MAY CREATE NEWS
When the price of a stock of a major public company moves significantly, the news media pick up on that event and report the stock move itself as news.
Stock moves are generated by imbalances that occur in the supply–demand equilibrium of a particular stock. Therefore, a news report about a significant shareholder selling a large stake for reasons, which may or may not be related to the company's performance, could create the perception that something is wrong with the company. The same is true about major stake purchases—examples of news media reports in which successful investors like Warren Buffet or investment houses purchase large stakes in public companies are perceived as positive news.
Moreover, many traders use technical indicators which show when a particular stock is “overbought” or “oversold” in the active market. Those technical indicators become “news” for the active traders who watch the stock charts in real time.
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