Do NOT buy stocks like HAIN

Disclaimers:

• The Following information is for educational purposes only, I am not a CFA or in any way licensed to give financial advice.
• I don't trade stocks
• I am a professional trader (I trade options and futures on the S&P 500 almost exclusively) and have been for the last 3 years.

From a fundamental point of view, If a company has accounting irregularities and a previous history of consistent growth, assume the books are cooked (extreme example, Enron). None of the numbers that the company has posted mean anything anymore.

From a technical point of view, the stock just lost 30% of its value in just a few days, and its last all time high was in August of 2015. This stock has long broken its uptrend, Stocks in general do not bottom instantly on the first big move down once they have broken their uptrends. Yes, in strong trends sometimes there will be sharp pullbacks that can be bought, but once you are far outside of the normal range its rare for the first huge drop to be the absolute bottom. If you are a stud day trader and know how to manage your risk, then more power to you, there will be counter trend bounces, and they will potentially be large. But I gather most of this subreddit is newbies or people attempting to self manage their IRA's/retirement accounts, and only a very small % are likely pro-daytraders (again if you are pro, stick with what works for you, pay no attention to me). Trends take time to change, unless you have deep enough pockets to actively change the trend, wait for others to change the trend first, and then follow along.

Here is a chart with some notes illustrated

Im a believer of a picture is worth a 1000 words, so here is a recent example of how quickly these things can unfold

And another one that looks like HAIN

And an example of a reasonable place to buy a beaten down stock

I hope this post can save at least one person some money, wether it be on HAIN, or any other crummy stock that lost its uptrend and is in free fall. The key to avoiding large losses is wait for the trend to change first.. you don't have to be the hero to buy the bottom tick in order to make money.

The above information is solely my opinion based on real life experiences in the market (From when I used to lose money trading stocks and what I see on shorter intervals in the futures market). Your experiences may vary. And always remember to manage your risk! its the only thing that will keep you in this game long term.

Submitted August 18, 2016 at 06:49PM by Project_52 http://ift.tt/2bBifs1