Ticker,
Surely, it would not seem like a pleasant Monday. There are two different issues to consider - VLNC trading activity and MSFT stock fall.
I do not view the VLNC trading activity as the result of the general NASD index going down caused by the MSFT price fall. These two events happen to coincide today. My conclusion is that VLNC did pretty well, considering the general NASD fall. jmo.
Last week money flow to MSFT stock was picking up in anticipation of a favorable out-of-court settlement. By Sunday morning, people knew that the talks failed and expected an adverse ruling on Monday. Traders sold off MSFT causing some indexes to fall, probably in panic. They expected a heavy sell off MSFT. During a sell off, it is not only the volume of shares traded that matters but also the rate at which the sell off occurs. There are computer programs that start triggering "sell" signals by sensing the rate of sell off, not just volume. It is important to sense the steepness of the fall as soon as possible. Events like these (computerized sell off, margin calls, shorting, etc.) cause price drops in other stocks.
Now back to VLNC.
VLNC had two things working against its price - (1) settlement shares shorting (2) coordinated shorting activity
These activities started early last week and by Friday last week, most of the large sales ended. Today's sales were not good enough to bring the price below 18. For some reason, the 18 level held today. It held well last Wednesday with a 8plus point drop. I do not know if it will hold the rest of the week. My guess is that since most of the settlement shares were sold off, the price will not be under the "selling pressure". Further I guess that the price may not resume the bullish up trend until it crosses above 33-34 level. It may take some news or something to move it up to 33-34 level. All in all, I did not think it was an unpleasant Monday for VLNC. I bought whatever I could afford (at 19-20) last week. I still believe that Castle Creek may trigger one or two attacks. (Paul, Rich, Robert Cohen are monitoring for this.) Then the massive shorting game may be over. We'll retire rich soon, no worry. Sorry for the long post. Ram |
