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Technology Stocks : Digital Ally Inc. - DGLY
DGLY 1.760-0.6%9:30 AM EST
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From: David Alan Cook11/8/2013 7:15:13 AM
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So why did the stock retrace 50% of its gain from its prior yearly high? IMO, given the sharp runup caused by some attention from short term traders, other short sellers have significantly shorted this stock as evident by the 100,000 shares reported short during the 15 Oct update. (See NASDAQ Short Interest). The next repot is due on 11 Nov. Short sellers took advantage of the uncertainty and lack of news from the Company/CEO but they know that if the CEO or Company responds by releasing news on recent contract wins before they cover, they could experience a huge loss / reversal give the low shares outstanding and float. The other short risk is that Investors and/or an institutions starts buying shares and decreases the existing float further.

Given the correction and the pricing in of bad news, any positive comments or news released during the conference call will have a larger impact on the price as the bad news is already priced into the stock heading into Tuesday's conference call.

My advice to investor is to list the three reasons you purchase a stock, hold the stock until sufficient data convinces you that those reasons you bought are no longer valid today. I believe that since the stock is trading at a steep discount to Industry price ratios and historical prices (See www.bigcharts.com monthly chart for 10 years - DGLY is trading at an 80% discount to 08 highs even though the outlook for growth imo is higher than it was in 08), there is significant long term upside potential . Either this leadership will realize this value or another management team will.
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