You know what? When the smoke clears, don't be surprised if it's just business as usual again for PLMD's stock. I've followed the stock for almost five years and ever since it has been on the Nasdaq (help me out Sam, about two years ago it changed?) the stock has traded wildly. I don't look for that to change.
Psychology IMO plays the biggest role in the volatility of any stock, and the traders who work with PLMD I think expect wide swings. How or why this happened really doesn't matter. I'm a daytrader, a very conservative one who almost never holds a position overnight. I think I'm somewhat typical (in psychology, not in capital) of the traders who follow PLMD. I WANT the stock to go to extremes. So when it's trending, I usually trade with the trend until I'm proven wrong. Then I look for entries to go the other way.
Ultimately fundamentals will win out. That the company wants to buy back shares is an important fact, but their statement that they want to be "proactive" against the short position is silly and meaningless. Those in the big short position are taking a significant risk and they hope for a big reward. They're not hurting the company at all; they're only hurting (perhaps) certain officers who want to cash out some of their options/shares. And actually, because the stock tends to swing too high as well as too low, it actually offers everyone a chance to cash out big.
As Sam suggests, the only way to smooth out some of these wild swings is to apply for admission to the NYSE. I, for one, would stop trading the stock if it went to the NYSE, and I think a lot of fish much bigger than me would do the same.
The long-term problem with this idea, however, is that the day is approaching when the specialist gets crowded out by the ECNs.
Good luck to you. |
