jhg,
Yes, I know there will be many in this game, all trying to do basically the same thing. The counteracting influence here is not just the buying power of the institutions, but also the MMs, who have every incentive to drive the price up and will do everything they can to absorb speculative selling going into the close. They've got no shortage of tricks up their sleeve, believe me, and anyone who is foolish enough to go toe to toe with those guys using direct access and Level II........... well, all I can say is those guys get paid alot of money to separate fools from their money, and they are very good at it. And particularly in a fast moving market, they've got all the advantages. Really, the only way I can see that they can lose at this game is if the sheer volume they are working against becomes overwhelming.
I guess what you are really asking is whether it is advisable to be out of the position no later than the close on Monday. My answer is that I think it depends on the volume on Monday, but if you want to play it safe, then yes, don't hold past the close on Monday.
Different stocks have played out differently under these circumstances, as you know. With BRCM, the way to go would have been to hold, but not so with JDSU. I think PWER will play out more like BRCM, less like JDSU. But I don't mean to suggest that you should hold past Tuesday, or even Monday. My guess is that PWER will close strong on Monday, and also trade higher on Tuesday when all is said and done, but there will also be a lot of selling on Tuesday and likely some substantial intraday dips, and huge volume for sure. The daytraders will probably have a field day here.
After Tuesday, I couldn't say, but long term I have little doubt that PWER will do very, very well. Earnings are coming up, and PWER could make for a very nice play on earnings, depending again on how it trades between now and then. You can bet that once the institutions are into the stock, they will want to see it rise, so I wouldn't be surprised to see some analysts trotted out to make glowing recommendations, new coverage, PR hype, upgrades, and new coverage, as is written in the script.
If it were me buying the big blocks of PWER, I would probably go to one of the big firms and say, "Tell you what. I'll put in a huge MOC order, and then kick back a 25% profit to your firm on top of whatever your MM can make on the deal, if you do everything you can to get that stock to rise after the transaction. So, I'd like to see a lot of glowing ink, upgrades, earnings revisions, peddling the stock relentlessly to your retailers, whatever it takes. And if you can't do it, just let me know, and I'll take my big order down the street and I won't be back."
Oh, but that would be market manipulation, now wouldn't it? And, they wouldn't do that, because it's illegal........<ggg>
WS |
