JTC (MDR cont'd):
(I posted most of this on a Yahoo board, but thought it was relevant here)
If you remember the great MDR fall (and I do, since I bought 4 times on the way down and then sat on those positions for over a year before trading out at profits on 3 of them), there is one thing I've learned. A damaged stock can bounce, and probably will, but a damaged stock is a damaged stock. We're not talking about juries or fundamentals here, just the stock. You pull up a Sharpcharts on this one and you have no "visibility" for what to do with it. Face it, for the next week or so you're going to be flying HAL on instruments in a dense fog, only the instruments won't give you any reading.
We now have a stock with a about 500 million shares outstanding which trades about 6 million shares a day. Each day for the last 6 months or so, HAL has traded in the 40s, 50s, 40s, 30s and high 20s. There are a ton of holders who bought this stock at 42.5, 38.7, 29.2 and who are now sitting on 1) a world of hurt and 2) and excellent tax write off, if they sell.
On Friday this puppy traded 77 million shares, many of them the same shares, but nevertheless almost 13 times normal volume.
Yes, HAL may bounce, but this kind of announcement is not similar to an earnings warning or even accounting irregularities. This is like cancer, and it will take a lengthy treatment, imho. Again, revisit the MDR chart:
askresearch.com ths=60+months&type=Candle&color=Graph+Paper&scale=Logarithmic&moving1=50+day&mov ing2=100+day&moving3=200+day&overlay=bollinger&bollinger=20+day&ind_obv=on&ind_s to=on&sto=15-5-5&ind_wpr=on&wpr=12&ind_rsi=on&rsi=8&ind_macd=on&macd=12-25-9&ind _roc=on&roc=16-8&ind_mfi=on&mfi=13&refresh=180
MDR, once a solid $25-35 stock, has NEVER regained those numbers, although you could have made a lot of moolah waiting for the shock waves and the pain to spread until MDR was a $7-8 stock, which is was for a long time and even revisited this year.
In any event, if you want to look forward and see what kind of chart HAL is likely to display over the next 3 weeks, think of MDR.
[Edit: I thought I'd add the sharpcharts here:
stockcharts.com[h,a]dbclyimy[pc25!c50!c200!i!d20,2!f][vc60][iUb14!Uk14!Lc3!La12,26,9!Lp14,3,3!Lg!Lf]
At its worst I think this thing could trade down into the single digits in the next few weeks. I might get very interested in the $8-9 range. As for the $10-12 range, I believe you'll have multiple opportunities to make those purchases as well.]
Kb |
