| To: KM who wrote (2191) | 7/10/1999 5:47:00 PM | | From: Sir Francis Drake | of 10027 | | |
KM - I personally did not bail out *only* based on the action of Friday. I bailed because the stock was acting very poorly for some time - and Friday was just the last straw. The thing is, I should have listened to the TA a long time ago, instead of wasting weeks with my capital tied up. The second NITE stalled, and did not take off - it was an alarm signal - in particular, the weak action following the FOMC meeting. When the selling continued into strength with big blocks flying, and the stock refused to participate in the broad tech/internet rally, and with every excuse, kept dipping below 60 - that was a sign of something very wrong - after all, the sector and the market were doing very well. The Barrons rumor *may* have been responsible for Friday's action, but this came on the heels of poor trading patterns that have been going on for awhile. Therefore, I thought there may be something else to all this - in particular, I suspect that *maybe* the issue of the locked up shares is what's spooking the market. I've seen what a release of such massive shares can do to a stock, and it is not pretty. The thing is, that the shares that are coming out of lockup are not all owned by "insiders" but by other players who may have a much shorter-term goals. After all, it is easy to see why they would like to unload now, just before earnings - the recent history, shows stocks selling off even after very good reports (YHOO, GE, etc.). So, what better occassion to sell than the days leading up to earnings - likely the strongest period for some time to come. Of course, this is all speculation, and maybe NITE will take off like a rocket, but that's the best I can come up with. The bottom line however, is that the TA was indicating trouble for quite some time, and from that point of view, I made a big mistake waiting till Friday to sell, no matter what happens from here on - since clearly this has been a period of dead money at best. At this point there are 8 trading sessions left before earnings - and just how high is NITE going to move in this time - given the share overhang issue looming over the proceedings, and also the technical damage the recent sell-off has done: a lot of people who bought in at 60+ are going to be very anxious to get out now that they've seen how weak NITE is acting. This will make getting past 60, 62, and 64 a bit of an ordeal, as a lot of burned folks will be unloading to get out. Perhaps it will be a breeze - who knows, however, let us note that earnings expiration is coming up Friday, and the overall market can very well pull back a little after the recent gains. That will make any climb by NITE go in the teeth of a pull-back market - a hard task under any circumstances, and certainly NITE has not been acting particulary strong. That would effectively leave 3 trading sessions for a decent climb - Jul 19-21. Can NITE in that time power through the logjam at 60-64? Who knows - that is not much time, especially if you remember that YHOO sold off the day before earnings. That leaves 2 days. Can NITE be at 70 or more in two days? I don't know. I guess we'll wait and see. I certainly don't exclude getting back in, if the TA improves, since I love the FA.
Morgan |
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