Your question is, as you say, a good one. However, we need to consider whether the assumptions made in generating this magical chart are valid in this case. When the bone rollers begin their incantations, any chart can be made to say anything. These computer models do not often apply to special situations, e.g. start-up ventures, or thinly traded issues, or those with large insider holdings. The proverbial "black box" cannot be counted on.
What we do know is that the number of mutual funds holding VLNC (as reported by IBD) has increased significantly over the last year, and has increased over recent months as well. The number of funds has held at 15 over recent weeks; it has not decreased. Does this suggest "accumulation" or "distribution"? Depends on how some shaman decides to define the terms.
We also know that there have been several "shakeouts" since November - margin related, tax loss related, or simply due to fear, impatience, or lack of information. During these shakeouts, I've noticed solid intraday support - someone feeding the bid size quietly. This suggests to me that buyers have repeatedly stepped in - as inconspicuously as possible - to take shares off the hands of the panicking mob. As easy as it may be to question my observations, I'd say they're at least as valid as some chartist's "universally" applicable program. If my observations just happen to be correct, then there are significantly fewer small VLNC shareholders out there now. More important, the large shareholders (holding as much as 75% of the meager outstanding by my rough calculations) will be in complete control of the supply/demand equation when production is announced and everyone suddenly wants a piece of the next battery generation. |
