On November 10th, 2014 President Obama made the following comment that hit the wire and thus affected Internet provider stocks.
President Barack Obama is calling for the FCC to reclassify consumer broadband service under Title II of the Telecommunications Act, which will give it the same treatment as a utility, making it subject to common-carrier regulations originally set up for wire-line phone networks.
This statement caused the Comcast (CMCSA), and similar stocks in this sector, to start selling off. It was a negative reaction to breaking news, a reaction traders can capitalize on.
My scanner picked up CMCSA as a stock rapidly falling, which grabbed my attention quickly. So, I began to look for a trade entry. Since the stock was selling off rapidly, I looked for a support level for the stock, a price spot from which it could bounce. I immediately identified support in the area of $51.30 to $51.80.
As the stock hit $51.80, I waited for some buyers to show their cards. I then placed an order to purchase CMCSA at $52.33, just a few cents above the five-minute reversal bar. I also placed my stop under the low of day setting my risk in place. As you can see from the chart below, the stock bounced nicely into $53.80.
I personally love fear-based intraday news events and bad news because they create trade opportunities that day traders can capitalize on for profit.
Trading Tip: News releases tend to create an imbalance in the stock which can create a setup.
#####
