Effects of good news on share price

Question: Is the statement "When a company declares good profits the share price must rise" correct?

In most instances, the above-mentioned may be the case provided

• the good news have not been discounted by the market yet and
• that the prevailing market sentiment is still bullish.

After all, in a bull market, all good news are regarded as bullish news.

On the contrary, in a bear market, good news may not necessarily cause the share price to rise.

In a bullish market

If good news:

• share price will rise
• if good news already discounted, share price will not rise.

In a bearish market

If good news:

• share price may fall

Ref: Making Mistakes in the Stock Market by Wong Yee