"Sell the news"

Stocks often rally into an anticipated catalyst as traders position for a good outcome. When the news arrives — even when it's positive — those early buyers take profits, and the stock can fall anyway.

Why it happens

Markets price expectations, not facts. If a good result is already 'priced in' after a big run-up, the actual news removes uncertainty and gives winners a reason to sell. The bar was set high, and merely clearing it isn't enough.

The setup to watch

• A large run-up in the weeks before the event.
• The stock sitting near recent highs.
• Crowded positioning (heavy options/short activity).

How we use it

Our setup score flags stocks rallying into a catalyst — the front half of this pattern. Combined with crowded-short and dilution-risk signals, it highlights names most vulnerable to a fade.