AUDC is up 15% today on no news while the Nasdaq is up 0.61%. That's excellent relative strength.
As posted yesterday:
ragingbull.lycos.com
it appears there is now an absence of sellers in AUDC, primarily because margin-related selling (caused by AUDC's steep drop last week) has abated. Today's strong showing for AUDC confirms that theory.
At this juncture, we can safely say that margin selling pressure HAS played itself out because the stock stabilized in the $7.50-$8.50 range over the last 5 days. Because there was no further AUDC share price declines during that period, no new margin calls were generated while margin calls from existing holders who bought at higher prices were sold out as their margin calls became due.
If AUDC wants to continue their buyback, NOW is probably one of the best times to do so before AUDC share prices rise due to lack of selling pressure.
Plus, if the Nasdaq stages a rebound from its steeply oversold position--even if it is a bear market rally--AUDC will probably be well over $10, so it would be prudent for AUDC to get as many shares as they can at these price levels.
Note that on Wed March 14th, when AUDC pre-announced their earnings shortfall, the stock seemed to stabilize (e.g. it discounted the news) at about $11.25 for most of the day.
Then, the stock market tanked and brought AUDC lower. My contention is that AUDC would have stayed above $11/share after the negative pre-announcement, had the market not tanked.
In addition, there may have been some shorting activity to bring AUDC down below $8 so a large client could accumulate. If there was a rich mother lode of AUDC lot of stop-loss orders at $8 and below (and we well know that the market makers can see all stop limit-orders in their limit-order book), then there was likely an incentive for them to short down to those levels and then buy-to-cover those stop loss orders.
It is a relatively risk-free proposition for the Market Makers and a lesson to the retail investor to NOT use stop-loss limit orders if they can avoid it because MM's routinely take advantage of them.
At any rate, we can look forward to a nice bounce from here because today, AUDC has just changed direction from its downtrend on stronger volume than during the past few days. Stochastics are showing a nice reversal and a crossover of the %K and %D smoothed averages, indicating an upturn from one of AUDC's most steeply oversold conditions in its history. |
