The Case of the Hollow Breakout: AMDA


Breakout on 10/24-10/27 (Friday into Monday)


AMDA broke out on 10/24/14, and spiked higher on 10/27/14 before coming back to earth. AMDA (Amedica) actually released no news during the breakout, and the reason for the surge in stock price is the low volume, which causes a large spread. On 10/24/14, the stock gapped up in the morning, and continued its rise throughout the day due to day traders pushing the price higher. On Monday morning (10/27), AMDA gapped up again, only to come crashing down in the afternoon, and has continued its decline ever since. Its high on 10/27 was $3.43, and now it trades at $.66. AMDA was the ideal short because it was being pushed up purely on speculation; its stock was being bought by traders wanting to buy and sell shares quickly for a quick profit, thus the increase in price was artificial. This type of surge cannot be sustained for extended period of time, and in AMDA’s case it lasted a bit more than a day before collapsing, with the collapse likely due to all the longs trying to dump their shares at the same time on the open market.

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