Ep:
I see nothing tempting about RRI here (same as I saw nothing tempting about it at 5.70, 5.50 or 5.20).
Let's assume that RRI will recover, by January, to the $7.00-7.50 level. Let's also assume that everyone has the same holding period: 6 months.
The weather forecast on this chart says rain, rain and more rain, since the chart has that absolutely ratchet down sustainable south-eastern flair. A big blowoff could jump it down hard, but it looks like a slow bleed to me.
The people who bought at $5.50, will have a 36% gain in January (assuming they can tolerate the gut check along the way), those who buy at 4.00 will have an 88% gain, and those who wait for $3.25 will harvest 130%.
The reality, of course, is that those who are patient, yet nimble, will have shorter holding periods and better annualized return on capital. Risking 5.50 over 6 months to get 36% is okay, but risking 3.25 over 4 months to get 130% is much better.
JMVHO,
Kb |
