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Reality Check
Not to rain on anybody's parade, but given some of the recent postings, I thought that I would point out a few things worth consideration.
First, I have seen several postings mention CORL as a takeover target. This does not seem to be very realistic......consider the fact that CORL was trading around $5.00 earlier this year, and nobody wanted to acquire them at that time. What on earth would prompt any corporation to want to buy at $12 or $13? Before you scream LINUX out loud, lets not forget that its "open" source. There are many strong, competitive software companies that could easily put out their own LINUX OS and apps, and presumably will, if and when LINUX really takes off. I don't think that they don't need to buy CORL to do it. A takeover is not in the cards, and you won't read about takeover potential anywhere except in a chat room.
Second, the fact is that CORL will miss likely their earnings estimate by 26 cents. Plenty of companies get punished for missing by a few cents, and CORL will miss by a whopping 26 cents (the estimate was for 12 cents and they are warning of a loss of 14 cents). They were trading at $18 9/16 prior to the announcement, and they are now at $16 9/16 on NASDAQ. Its doesn't take a market pro to see that there is still significant downside to the stock (regardless of the press releases and CORL's favor among daytraders). Two dollars is not enough punishment, and it does not matter how much CORL is already down from its high. The only thing that counts is where were they trading before the news.....and where they should be trading afterwards.
The rebound on Thursday was healthy, and definitely more than I would have expected. Its the kind day that longs look for to get re-assurance that they are on the right side of the trade despite being in the red (as evident on several message boards). But, I think is most likley attributable to two things. The first is the general euphoria on the street prior to Christmas. Its hard not too be long everything on a day like Thursday. Also, probably as many as 70% of stocks will rebound a little the day after a big selloff if the market is strong the following day (aka technical bounce). The second reason comes back to those tricky market makers. The professional traders are really really good at what they do. Why leave money on the table when there is more for the taking? While many market makers seemed to be buying to cover some of their short position on Wednesday (which is the only reason why CORL didn't fall further) they were back to shorting on Thursday. This is typical for them. They want to lure in more longs and inexperienced daytraders, before they drive it back down again. They are probably the most profit motivated individuals on the Earth. But then, thats why they get such nice bonuses this time of the year. They may drive it up a bit more depending on the overall market, but this is only so they can continue to short before they push it down again.
Lastly, and for me, most importantly, the technical indicators are even worse now. CORL is not likely to cross above its 10-day EMA anytime soon.....and its chart just looks awful. Its in strong SELL MODE. Relative Strength, Momentum and Rate of Change (ROC) have now turned negative, joining the previous negative indicators I mentioned on Dec. 20. The signal is still SELL.
Based on these factors, you will profit most by either going short or sitting on the sidelines and waiting for a better buying opportunity. While I covered my previous short postition on Wednesday morning, at this price level I am finding it hard to resist shorting CORL again. There is still plenty of downside on this stock.
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