Serry, I'm thinking about shorting VIAS. The news is already out for all of the y2k companies, and they have been overvalued for a very long time--that isn't the problem. The reason that I am bearish on VIAS, is because the momentum that carried the stock up from practically nothing, is now gone. The only people looking to get into the stock these days, are day-traders, looking for some fast money. Eventually, they will move elsewhere.
Something about momentum stocks: On the way up, no one cares about valuations. Its the "story" which is all that's important. As soon as the psychology changes, however, then look out below. You'll see negative articles in newspapers and magazines (which hammer away at the valuation factors). Upward momentum stocks have a "positive news momentum" behind them. Because of this, negative news are essentially ignored, and positive news is glorified with amazing runups. As long as the positive news momentum is with a stock, it will be OK. The recent news (articles), however, have had a negative impact on VIAS (yesterday's fall was due to the Wall Street journals negative editorial in the "Heard on the Street" column). When negative news finally has a negative impact on a momentum stock, this that the stock is in trouble.
I think another very important issue is the fact that the other y2k stocks have already begun dying. Look at charts of DDIM and CHRZ. Also, notice the way that VIAS failed to make a higher-high during its most recent rally (it topped-out at ~52 this week).
For those reasons alone (and I could go on and on), I think that VIAS is a great short-play right now. In fact, one of the best in the entire market.
Don't get me wrong, I have nothing against VIAS. In fact, I really liked the stock on the way up. But there can't be any emotional ties to any stocks.
Sal Habash |
