Why did this stock move?

A share price is the point where a buyer and a seller agree. It changes when one side becomes more motivated than the other.

Three common causes

• New information: results, guidance, a regulatory decision or a commodity price move.
• Flows: index rebalancing, fund inflows, or a large holder exiting.
• Sentiment: expectations changing without any new fact.

If you cannot find the information behind a move, it is usually a flow. Flows reverse more often than facts do.

How to check, in order

• Look for a filing or press release timestamped before the move.
• Check whether peers in the same sector moved together — that points to a commodity, rate or index cause rather than company news.
• Compare volume with the recent average. A large move on ordinary volume is usually sentiment; a large move on heavy volume usually has a cause.
• Check the calendar for index rebalancing, lock-up expiry or an earnings date.

The trap

Financial media supplies a reason for every move, because a reason is what readers want. Be willing to conclude that a two per cent move had no cause worth naming.