Tunica, A spring can only be wound so tight. VVUS has only had 17 days since May 28, 1977, that it traded under 500K shares. Of those, the stock went up 8 times the next day for an average increase of +$1.15, and it also went down 8 times the following day for an average decrease of -33 cents.
Only once, did VVUS close at the same price two days in a row while trading under 500K shares during this time period, today and yesterday. Further, I'm not sure, but it is very possible that VVUS has NEVER closed 3 days in a row at the same price like it has done this week so far; and, with declining volume: Monday 772.2K, Tuesday 421.4K and today, 375K.
How tight will this spring wind-up? The record low volume during this period was 243.6K on 8/25/97 and VVUS was trading at $26.06. In 5 trading days, VVUS gained $2.15 with volume still under 1M shares. VVUS closed at $30.50 in 6 trading days beyond the record low volume recorded on 8/25 with volume at 2.64M shares for a gain of $4.44 per share or 17%. Using this scenario, strictly for fun, if the volume were to begin to loosen up and the stock finds a 17% gain ($2.55), that would land us at $17.55, arguably.....in the land of squeeze.
Feeling good,
Frostman |
