I've been trading, in a very amateur way, in the stock market for a year now. I've noticed something pretty obvious. When some evident good news appear on a stock, the price goes up. So it goes the other way around. For example when news appear that a big investment company has changed the strategy for a certain stock from "strong buy" to "strong sell" the stock price drops.
Taking this in mind, why couldn't one be constantly checking on the volume of all stocks in the market, and when an unusual fluctuation occurs check the news for potential evident good or bad news (Such as the example, or beating by far the expected returns for the quarter) and the buy or short the stock until the end of the day?
The potential pitfall that I see is that the market doesn't respond as one expects to the news, or that one may get too late in, but when the news are so evident, and an algorithm for checking them on time is deployed, can this be avoided?
(Sorry for the English, feel free to edit!)
Considering rhaskett answer I wanted to post a specific case in which this works, note that the question is if it can be generalised to most cases.
This is today and yesterday BBRY chart (12/11/2014 - 13/11/2014)
There's a big spike on volume at 12:00. If the algorithm was slow, by 12:30 a notification could be received. The news of BlackBerry-Samsung partership where posted at 12:27. It isn't the most evident good news. But my point is that the price change came after some of the volume spike. In spanish we have a saying that could translate to: "After the war, everyone is a general".
To avoid making the question too open, does this not happen in a lot of cases? Is it too hard to discern evident good or bad news?