When a stock hits a price in a panic, it rebounds, sometimes sharply. However, Z's Principle of Panic is not about this. Rather, it states that very soon, often in a few weeks, the stock will hit the panic price again, no matter the market, no matter how ridiculous that panic price appeared.
I started noticing this years ago with stocks following earnings. So far, this still happens the most often with earnings stocks. Today I got an different example.
SQM has been touted by Navellier to be the "battery" stock which is guaranteed to go up by at least 50% in a month or two. About 4 weeks ago, in a panic opening spike down, it hit $36.36. I caught it there. It rebounded. With Z's Principle of Panic, I felt the toad should hit that price again, soon. However, lately I lost my confidence on at least this one with the ANALysts pumping the fertilizers daily and Navalier pumping this toad in particular.
However, today, it hit $36 again.
I wrote the above a few months ago on my blog. The most recent example is C. Lots of people probably thought the toad would never tank again after the FED backstopped $300 billion of their toxic waste. Last week, however, it almost revisted the panic level reached a couple of months ago.
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