. . . . . . On Shorting Linux Mania:
As we discussed, shorting the gap on LNUX [@ 260], RHAT [@ 290] and
CORL [@45] would have been the correct move so far. . . this mania is over. . . money is looking for the next mania. . .though much will be blown at Bloomies.
CORL around 38 here. . .[still great short op]. . .LNUX near 230. . .I am sure we will see CORL close in the 20's today [Short $45/cover $22.50 = 100% single day gain!! Hello?] and back to teens next week. . . .where I would consider being a buyer again. . . . and LNUX like I said pre-market, will close under $200. . . not interested in being a buyer at all.
The only one I would not short here [or ever] is RHAT. . . because it will continue to get the benefit of mutual fund investment. Both CORL and LNUX are the safe short plays, IMO. . .with CORL being the best of the lot. . . remember, the Canadian shorts are going to be all over this one. . .and they never lose. . . regardless of volume.
Nearly all Linux plays gapped up and are trading significantly lower. PERL is the exception. . .as it is still "in play". . . what many short-sellers have not yet figured out . . .is that the more volume you bring to the stock by continuous flow of short & cover, the more attention you draw to the stock on volume alerts, which is the primary alert to daytraders. . . so rather than get the thing to go down . . . you catch yourself in a squeeze play every time.
If you are going to short a trend/mania play, it is more profitable to do it in stealth, in my opinion. . . .higher percentages.
If I were shorting Linux plays this morning, I would have singled out the weakly looking one. . . . . . thus, shorting SFTW at the gap around 11 1/4 would have yielded 37% in exactly 1 hour with minimal risk and no attention. Take the morning off and re-short the afternoon high. No muss. . no fuss.
By comparison, PERL is a volume leader today. . . and the momentum the past hour has been UP, not down. And with a 3.2 mil float, double the float by 10:45am. . . my guess is that at the current volume rate, by 1pm, we should see a drying up of all legit short shares, leaving only naked ones. . . and the stock will have to run NORTH before sufficient shares are shaken to continue with the current rate of volume. Now with a 3.2 mil float. . .the thing has a good chance of running HIGHER than the gap up. . . perhaps to $35. . . before the tug-of-war resumes with the increase of borrowed shorts. . .
Honestly, I would be very surprised to see PERL end the day in the red. And if I were to see it around $25 again this morning, I would be inclined to jump in long for the run to well up over $30. Seems like a no-brainer.
So there seems to be two types of shorting plays that occur. . . the popular ones and the profitable ones. Take a guess which one I would pick every single time.
Rande Is |
