Learning From the Lowe's Tumble

The Efficient Market Hypothesis states that markets can't be traded successfully because all available information is already reflected in the price. Experience contradicts this for a variety of reasons: For instance, some of the information could be flawed, or its significance may be incorrectly estimated. Perhaps the most compelling reason to reject the hypothesis is the fact that market participants don't always behave rationally. One thing is certain -- if markets were efficient, they'd be much less tradable.

For example, it was a mere three weeks ago that Lowe's (LOW) reached an all-time high. Then a weak earnings report smashed the stock below its 50-day moving average. Like a fighter after absorbing a well-aimed punch, Lowe's has staggered ever since. Today, the stock is trading at its lowest level in nearly three months....306 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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