Looks Like Capitulation in Viacom (VIAB)

posted Nov 17, 2017, 10:37 AM by Intelligent Investor   [ updated Nov 17, 2017, 10:38 AM ]
Capitulation is when large institutional investors give up on a stock and sell all of their holdings in that stock. Capitulation is a sign of a bottom for a stock. It means that everyone that needed to sell that stock for any reason has already sold. There are no more large institutional sellers left.

A few signs of Capitulation are:
1) The company delivers bad news and yet the stock price does not go down much.
2) The company delivers bad news but the price has become so cheap so the stock price actually goes up.
3) Large volume meaning large institutional holders are giving up or buying.

Signs of Capitulation in Viacom (VIAB):
1) The company delivered bad news when they announced earnings yesterday 11/16/2017, but the stock price didn't go down much. It actually bounced back from its lows.

2) And if you look at the chart below, the stock price bounced back from its lows yesterday and soared almost 10% today 11/17/2017 without any significant good news about the company. The price is so cheap with a P/E Ratio of 5.56, the price actually goes up.

3) Yesterday 11/16/2017 there was large volume while to stock price was going down meaning large institutional investors are giving up. And today, there is large volume again as the stock price is going up 10%, this means that large institutional holders are buying because of Viacom's overly cheap valuation, P/E Ratio is at 5.56!

Source: Google Finance

Disclosure: We own shares in Viacom (VIAB)