Not always, onurbius........
This past spring I traded a stock that had a ton of shares coming out of lockup (can't remember the company.........possibly AVNX). My memory is sketchy, but as I recall the float was increased some 13-fold. Despite widespread fears (widely posted here on SI and elsewhere) that Armageddon would ensue the day the shares came out of lockup, nothing really happened to the share price on the dreaded day. And, if you closely examine the tables on sites that track shares coming out of lockup, you will find no consistent pattern to the reaction of the stock price to shares coming out of lockup.
True, sometimes there is a dramatic effect, particularly if everybody is waiting to cash out. But if nobody wants to cash out, then nothing happens. And, in fact, I consider this to be a very bullish sign. If all the insiders suddenly could make themselves very rich, but refrain from doing so, then that most likely indicates that they think the company is just getting off the ground, and are willing to put their money where their mouth is. I like that.
Still, if a large block of shares is coming out of lockup, it's probably wise to wait and see what happens before investing. If everybody cashes out, then I'm gone too.
In the case of DVSA, I'd have to say you're right. The huge volume today and yesterday suggests massive cashing out, though this could be the underwriters rather than the company principals. Still, it looks like DVSA may have more downside from here. But I still think in the next couple of days it will likely correct back to the descending 10 day MA, though not necessarily filling the gap before declining again.
As always, JMVHO........
Regards,
Walkingshadow |
