Don, you asked why I shorted AMAT. To answer that I need to tell a story to illustrate how I think about trading.
On 7/31/00 I saw that there were $7 in puts for each $1 of calls on AMZN. It appeared a short squeeze was imminent, so I bought it (I hate AMZN, the stock). Over the next 30 days it rose from 30 to 43 before beginning its collapse to $10.
To me, that rise to 43 was strictly a ploy for distribution
to bottom fishers.
On 2/14/01 AMAT issued an earnings and profit warning. (The Street.com described the CC as dreary and confused). The stock rose over 5 points on >2X ADV, and >2 1/2 the next day.
I believed the stock was being artificially advanced to prevent massive selling, so I shorted it (1 day too soon).
It made a high of 50 on that move, before falling as low as 39 over the next few days. I covered just above 41, and re-shorted yesterday at 47 3/4. I believe the stock is under distribution, but timing is everything.
2. This is also a market call.
3. I don't like to short flaky stocks because of my fear of manipulation. It exists everywhere in the market, but is much worse in some areas.
These are my thoughts only, I don't expect anyone to agree with me. My life won't change much if this works or not, but I think it is a good speculation.
Regards, |
