The Rumor Mill — How to Trade Trulia (TRLA)
Discussed in this article: Trulia Inc. ( $TRLA )
Let’s look at Trulia ( NYSE:TRLA ); the company came out today and said that there’s no way we’re anywhere near a bubble in the real estate market. I don’t recall any of the home builders ever saying that we were in a bubble in the real estate market just before the bubble popped either. So, really not too concerned about what Trulia ( NYSE:TRLA ) thinks about the real estate market, no real credibility as far as being unbiased, right?
So be that as it may, why am I covering this stock? I don’t care about their opinions on real estate. What I care about is the rumor, and it popped across Yahoo that the company was at least in talks to be acquired by Realogy ( NYSE:RLGY ), which also probably doesn’t think we’re in a bubble, imagine that.
So the price I guess was rumored to be $52.00. How the heck would they buy it for less than that since this was actually where the stock was trading back in mid-September? “Hey, we’ll buy your company for $47.00,” yeah, right, that’s not going to happen. So that’s the rumor, do we think the stocks going to pop tomorrow morning? It very well might.
What time do you think that rumor started to be disseminated? Well I’d say it probably hit the wires around 2:40 or so. Well, look at that, 2:40; sometimes this stuff is just that easy. So the thing is, this rumor hits the mill and the stock just keeps going, and going, and going. I’m not showing any after-hours trades, I’m sure it’s probably trickling up a little bit more. Do you know why?
A lot of people don’t really look at the news on Yahoo during the day. I’m sure it hit the Bloomberg terminal and all that jazz, but the thing is, you want to look at this and you want to look at this intraday. The stock could very well pop up; I mean this would be the target. The only way the stock trades up this high is if there’s some kind of an announcement made.
Do I think there’s going to be an announcement made tomorrow? I don’t think so, because talking is different than doing, but you never know. If you get a heads up as far as when and if they do, when they’re going to announce something like that, don’t tell anybody because that’s insider trading. But we could see this stock do peculiar things tomorrow, so what you want to do is just watch and see how the stock trades tomorrow; if this rumor has any kind of legs it’s probably going to gap up just a little bit.
Whatever you do don’t short the stock, that doesn’t work, but if you want to participate in this just make sure the stock is above where it opened 5-minutes after the bell. If it’s not, you don’t want to be involved in that.
Also, that’s kind of a 59-Minute Trader thing, a course that we have essentially on day trading, trading the first hour of the market so then you can make your money and go to work, or if you make enough money you can tell your boss, “My name is Johnny Paycheck, take this job and shove it.”
Either way I think this is a trade that can work for you even if the stock does gap up. You just need to be watching the intraday charts.