General Stock Investment Strategies/Company News


QUESTION: tbaarr
I own shares of DWS Municipal Income Trust (KTF). The only information I can find on the Internet about the company is announcements about upcoming dividend distribution and stock price. In the last week the stock price dropped fairly sharply and then began a corresponding rapid recovery. In that same time frame, there was sharp increase in buying and selling. Obviously this had to be the result of some sort of "news", yet nothing out of the ordinary appears upon Googling KTF. Where else could stockholders have gotten real time information to have created such movement?          Thanks.          DBRJ

ANSWER: it could be as simple as market manipulation right before an ex realize that there will be millions of shares sold on ex div day to all the sheep that reinvest their dividends..and that occurs on one day...its a guaranteed fire sale...the difference is most specialists take advantage and drop  the stop using an excuse like the recent downtrend and then jack it up to fleece the sheep....I trade on this move every 3 months with ibm and cat for over 30 years...what day is the ex div day...and how close to a traditional market low day is it..30 june is end of fiscal year and most stops drop then rise after the 4th of july and then stall around 5-15 aug and slowly drop toward april...this is a traditional trend...but lately these drops come quicker and so do the recoveries....good luck...see if you can find an old copy of the wall street jungle..written by richard ney in the 80' may open your eyes.....good luck

---------- FOLLOW-UP ----------

Thanks for an instructive reply to a rather naive investor. Your patience with me is appreciated. Let me rephrase your answer. Say the ex dividend day is May 5. For investors "planning" to purchase, they would want to purchase May 4 (or is it 5 or 6?) to enjoy the upcoming dividend. So right at this time there should be a slight drop in the price due to the brief increase in "demand". Then, a few weeks later, when dividends are distributed, the "artificial demand" from the reinvesting "sheep" should drop the price even more. Now you say "specialists - drop the stop". Did you mean "stock" or did you mean "stop" as in the command to your broker as to a price level at which to automatically sell (or buy?). It would seem the latter when you say "then jack it up to fleece", since "it" would only make sense with "stop" - YOU can't jack the price up. Now presumably you are going to first sell before the ex-div, then repurchase with that capital. However, isn't that selling high and buying low, as well as forfeiting the dividend? Hey, I told you I was naive.

you have to hold the stock prior to the ex div.. that means the 3 day settlement period is get the div... the downtrend i talked about usually occurs 3-5 weeks prior to the ex div date...but there is an occasion where its a week before...thats why you graph the stock so you can project the high and low point.... like ibm has been bouncing between 188 and 200 is a odds on bet.. so buy between 190-192 and get out at 200 or 199...then wait and watch itf it tops at 210 again and then frops... ibm is due for a split.. as its too expensive...its a 70 buck stock... good luck

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I retired in 1996 at the old age of 39 by using city based utilities and leap call options. on stocks like ibm and wal mart because you can control these stocks for 2 years for ten cents on the dollar.
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