Jonathan,
Whether we are talking about well-established companies or growth stocks or whatever, it is virtually impossible for a stock that has been trading at $20 to suddenly rise to $45 in less than 1 week without any pullback. I can understand if the stock discovered a cure for cancer, but on no news? Just because another 'sibling' company (YHOO) managed to beat estimates? No way. My SEEK short is the most confident trade I have ever made. Even BLDPF, YHOO and AMZN have retraced, not to talk of SEEK. I cant even remember the last time I visited infoseek's site. I go to YHOO everyday, I sometimes buy books at AMZN and AOL is my ISP; thus I refused to short them.
Remember IOM, QDEK, NSCP, PRST, IMPX etc?
They were making money when they had their meteoric rise but they still crashed!
I get nervous when a stock's angle of ascent is greater than 45 degrees. Also, if it is trading anywhere above 50% of its 50day exponential moving avg, it starts to look like a really good short; just from the Technical Analysis point of view. SEEK satisfied both criteria.
I will be willing to take a side bet that SEEK will trade under $20 b/4 the end of the year! Maybe even b/4 the end of July!
--Olu E. |
