Mannkind Stock Volatility: Yesterday's Crash, Today's Rise, and Tomorrow's Crash

Yesterday's 10% drop in Mannkind stock is symptomatic of the volatility we can expect to see up until the 29th when the FDA rules on Mannkind's application for Afrezza.

For those of us who are longs -- I would advise against placing any stop-loss orders and also advice putting in place limit buys for where ever you have placed your stop-loss. 

The stop-loss was designed to allow people to limit their loss when a share's value decreases.  This mechanism does not work in volatile stocks like Mannkind coming up to a binary event (the FDA decision).  Many of the sudden drops in price are a result of shorts, hedgefunds, "big money" who are selling only to trigger the stop-losses resulting in a further drop in the price...ie they are leveraging the people who have put in stop-losses to drop the price.  Than, they buy before anyone realizes what has happened (ie when they stop selling and start buying while the stop-losses continue to be exercised). 

A day later what happens:
"Big Money" - lowers the cost of the stock to themselves
Average shareholders - end up with lower holdings and early profit taking -- all of which is not intentional.
Stock price: back to where it was before the drop.

The only way to counter this strategy (and reduce your own heartburn) is to either
1. not put in any stop-losses
2. put in limit buys for where-ever you have stop-losses -- which will let you partake in the uptick that the "big money" is planning on taking advantage of.