Joseph you are not alone - many people are losing money in NITE. That is why I have been saying all along, that a lot of technical damage has been done to the stock. Many people, like you, are getting stopped out. Others, have unwisely bought into NITE at the time of the infamous bull call of Mr. Raymond Norris, in the 60's area. When NITE was still in the 56 area, in response to a post, I wrote that it is *definitely* safer to trade NITE than go long:
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while the same day, Mr. Norris' siren call kept reassuring. Those who unwisely decided to follow Mr. Norris' "keep holding" cry, rather than the "safer to trade right now", and are on margin, are getting hit with margin calls. That adds to the damage.
Now many people are bailing either involunatrily (stops, margin calls), or bail because of fear, and many who got in for the earnings run are leaving after the disappointment of no run. This process is still in ongoing, because there are still those who think we are going to turn around any second. Soon, even those will be gone.
At that point, you are looking for buyers and bargain hunters to come in for the price to start moving up.
This is how it was *supposed* to work: NITE sells off, in a sharp decline, a one day strong decline to 48 1/2 on huge volume, where sellers are exhausted and bargain hunters enter, while traders cover shorts and go long, and the momentum propels the stock strongly upward. Instead, this is what happened: the sharp decline to 48 1/2 did not happen, instead it broke off too early and did not lose all the sellers, did not entice buyers and bargain hunters with the low price and the climb simply encouraged shorts to take new positions.
Now, not all was lost - NITE could have found some kind of plateau after testing the 48 1/2 level the following day, but unfortunately a bit of bad luck hit, with the market extremely negative, and NITE broke below the 48 level, which was definitely not good. At that point, the 40s truly openend, and now 50 looks to be in the process of being established as a barrier. The reason is as follows: if it just tested 48 1/2 a couple of times, and the market was positive, then NITE would have a short distance to vault past 50 (1 1/2 point), and so 50 would not be establishing itself as a barrier. The 48 1/2 would have lost the "weak" sellers, but with a positive market, buyers would see 'value' and start buying, while shorts would be less confident about selling becuase they don't have the security of a negative market. However, once the stock broke below 48, all of a sudden, the distance to 50 started looking very large (2+ points), shorts were encouraged by a very negative market and selling cascaded further pushing the stock down, while buyers were freaked out by the negative market and the fury of selling (buyers generally are absent at the beginning of a plunge in the market), so there were no buyers to absorb the selling. Now the buyers are uncertain - both because they fear further declines, *and* some buyers are now enticed into thinking that a better opportunity to buy cheaper will present itself. Meanwhile the shorts are now joined by many "worried" hands (as opposed to "weak"), and folks who are hitting stops and margin calls. Selling is dominating. A negative market is working against longs.
So, what can stop this slide? Either a market recovery and a new enthusiasm to take one more ride on one's favorite stock. Or, if the market declines, the slide will continue until the stock hits a powerful TA point - some see it as the traditional one, the 200 DMA - IMO, that is inappropriate for a stock that has has a 'rocket' type move, and the TA point is on a much shorter time scale - that is a chart point, and if you pull a chart out, you will see that there are several points with increasingly strong support (you have to correlate that with volume too): $45 the begining of the last breakout climb, $36 the first breakdown of after the last breakout, and finally, the $32 level of the rampup of the last move. However, the one important aspect to keep in mind, is that the most important trigger, is the moment of the perception of "compelling value" - this is when buyers come in with big numbers, and traders join in a momentum. This can happen at any moment, and depends partially on the market conditions. Obviously, if the market is positive, the perception of "compelling value" could be here, at 46-47. If the market is negative, and there is a lot of fear, that can be anywhere along the curve all the way down to "ridiculous" and "absurd" levels (like the final support of $32).
So, one way to attempt to anticipate where NITE might stop the slide, is to attempt to figure how long the market stays negative. My shot at this would be that we are actually not that far away from a bottom, and *if* there is any further slide, it should be limited to the 41-42 level. There is only one thing that is troubling me, and has troubled me from the begining of this ordeal these last few weeks. The mysterious and persistent selling that is not abating. There are brief lulls (like when NITE briefly reversed and went to 56), but then the selling resumes - and I don't mean the retail selling. I mean the 20-50K blocks that sell every trading day, and that have been selling for weeks now. I thought we may find some kind of explanation after the earnings were released. But there was nothing there. The selling continues, and frankly, as I said from the begining *I do not understand* what is behind it. After all, it is hard to fault NITE on FA grounds (maybe only the ECN issue is touchy). And NITE is not nearly as "overvalued" as countless other issues which have not experienced anywhere near the decline. My only hypothesis is that it is the issue of the locked up shares is leading institutions to short NITE in anticipation of a flood of shares which will redeem the shorts at a far lower level. Of course there are other rumors purporting to explain the decline, but the ones I have heard are not credible IMO, and I will not validate them by posting them.
Having said all that, I have been public about taking a *long-term* investing position in NITE at 48 1/2. This means I will hold it, and I will not sell it, no matter the decline short time (as an investor, I would only consider selling it, if IMO the fundamentals change). However, as a trader, I also have a *separate* batch of trading shares of NITE, that I will continue to trade as long as NITE is floundering, and looking for direction - I will attempt to time the "bottom" and at that point I will use the profits from this trading to buy more shares of NITE, and so I will lower the mean cost of my *investment* NITE position. Thus far, I have already secured enough of a profit to have lowered my cost to substantially below the last close of just under $48.
Good luck!
Morgan |
