You raise a very good point, if you are day trading the speculative end of the market, often the company is seeking to raise capital and they often do it while releasing big announcements that the day traders pounce on, only to find long suffering shareholders are using those block buster announcements to offload....this is entirely fundamental analysis
If you are going to day trade, my advice is to look for top 200 stocks to short
Often these companies hide really bad information for a really long time and when the proverbial hits the fan, the stock falls and keeps on falling, such as the recent SGH.
Algorithmic trading often means entry into a safe position is more likely, because algos seek to make money on small price movements, they jump in on the long side, in anticipation of temporary reversals.
You can see these share price gyrations on a live, second by second chart, where you get sharp movements in both directions once the current selling pressure has exhausted and then short term, short positions are closed
