Absolutely, a bounce will be a shorting opportunity. The stock is now a "show me" stock in the eyes of the market. Why is the stock shortable on a bounce? Very simple. There are still those who are holding, but who want out. I doubt that at this point NITE will decline far enough to get them to sell - these are folks who bought in the mid-low 50s on down. As NITE declined they held on - and will hold on a decline (according to the maxim "I'm too far down to sell now"); but as NITE climbs - they will be anxious to bail ("I'm close enough - or breakeven - can't wait to get out"). This selling (the result of technical damage) will provide the impetus to bring the stock down, joined by short sellers. That mechanism will prevail until all the "disappointed" finally sell. The darkest cloud, on technical grounds however, is the issue of the locked up shares. Those holders will not wait forever to sell at least ***some*** shares (I am not claiming anything absurd, like they will sell all shares). This will really help the shorts keep the stock down, as they can be assured of a steady supply of covering shares. The real problem is that the supply of shares, and selling pressure is not balanced by demand. NITE is now a "show me" stock, which means that buyers are staying away until NITE has a sustained rise. But how can it have a sustained rise with the selling mechanism I described above? This means to me that NITE will be stuck in a trading range, until there is some dramatic developement (such as a takeover by MER, or some astoundingly positive PR or development). Otherwise, the long climb back will have to happen on several quarters of good growth and the showing that ECNs are not a threat. That is why I am not looking for NITE to start hitting real sustained highs until next year.
I too sold my trading shares that Friday when it looked like it was going to break 60, and I announced my reasons on this board. I then played it short, and announced my reasons for it. I stopped shorting and went long a bit early - 48 1/2. Since then, I've kept my investment position, but I resumed trading my "trading port" and I will trade it, till I lower my 48 1/2 cost to $20-25 (right now, I've managed to get it down to $36 or so). Sad, but you can't fight the tape.
Morgan |
