Most stocks split like to stay above or at the level they were basing for some time, that is when the big money was
accumulating.
This stock hasn't exactly been "basing" - it's doubled since Dec!
Now big money has to get out then they will like to see higher prices after the announcement. So
momentum will keep on going till the day of the split.
I don't follow your logic. "big money" wants the stock to go up,
therefore it will? Why? It already seems to be getting pretty
pricey. I doubt that manipulation can really take it up another
50% in the short term, but I suppose it's possible. Isn't there
supposed to be at least some semblance of financial reality involved
even in technical analysis?
Till last June this was between 24 and 30. So 3:1 post split
indicates a 90 target (seems too high, but it is not). Also 90 is a good round number that divides by 3 ( there are others
too 66 being the nearest)
You've really lost me here...you mean management wants the stock at 90
so that post-split, the stock is sitting at the same dollar figure it
was basing at for a while before the run-up? Or that traders will
decide that is what should happen? By this logic, management could
arbitrarily pick the split ratio to get the stock as high as it wanted! "Hey, let's split 10:1 so the stock will go to a pre-split
equivalent of 300!" Please correct me if I misunderstood your
argument here...
Secondly stocks that split 3:1 have a greater momentum than those that split 2:1.
Yes, but momentum should be obvious from the chart, regardless of
what split ratio is decided upon. And isn't a stock split a symptom
of momentum, rather than a cause of it?
And at level of 30 PE expansion can
occur much more easily than at the present levels.
You don't give your fellow investors much credit here. If the majority
of the market is institutional buyers, or even brokers for individual
amateur investors, shouldn't that majority realize that absolute
dollar quotes are meaningless for valuation purposes. I agree that
in the short term, valuation can often be ridiculous, but people
still at least casually think about P/E ratios and stuff. I find it
difficult to believe that UTR would receive an astronomical P/E
just because of a stock split. Sure it's a great company, but it's
not like some super-hyped IPO or something!
I just find your reasoning pretty far-fetched. Feel free to explain
further, I'm interested...
Regards,
Andrew |
