The recovery/stabilization probably has several causes - lots of good sector news, the NAZ recovering, and particularly with biotechs, maybe not short s being squeezed exactly, but wisely covering as the see the downtrend ending? The only time smart shorts keep the position long term beyond the technicals is when there is bad fundimentals in the company, and this is not true of the sector. IMSCO Scott
(who's majorly relieved with the recovery. Bought in too soon at the end of Dec expecting that we had reached a bottom & the end of tax loss selling, and even did some margin buying. I was within a day of margin call pain. Now the bet looks good, although imperfictly timed.)
OT one potential bargin out there that is not biotech is PERL (networking). They were profitible, did some acquisitions to adjust to a changing market, lost money wile integrating, stock got hammered, but are now profitible again. Intel\Shiva just exited a market they are in (PERL has been doing more investment in upgrading) so over the next 6 months, as PERL has a growing profit it may have a good % upside left. They are positioned to capture business in the move to mixed communication types, making a big committment to supporting Voice over IP. Big tax loss selling last year, as there was a huge, unsustainable runnup over the Linux feaver, so lots of large losses. I had some 10x profits since I knew it was unsustainable. The points some folks bought (teens & 20s) were so high it will be a long time before those holding "until I get out even" will sell.
The risk\reward looks pretty good, but I would not make it a big position % wise. |
