Speaking of the sage JJC (Jim Cramer) of TheStreet.com, he has this to say about stocks that bounce back:
In either case the lesson is that great stocks, like great professional teams, tend to bounce after a pasting. So if you wanted, say, to short Dell, you should respect that bounce and wait until it runs its course. If you wanted to exit Dell, you should wait for the bounce to go higher, too. And, if you are like me looking for a point to buy more, you should seize on the bounce to buy more Dell. Which I did.
It's funny, the term oversold is technically derived. I used to want to pounce on a stock after one of these death spirals and go buy puts, with the idea that the corpse couldn't fight back. But my wife would jump on me with "never short an oversold market," or "beware of the oversold bounce." That's why , in last night's chat with TheStreet.com's technician, Gary B. Smith, I was so keen on asking about America Online (AOL:NYSE) and Yahoo (YHOO:Nasdaq) and other techs, because even if you hate these stocks with a passion and I know many of you do, you must respect the oversold bounce.
By no means do I mean to imply that THQI is like DELL, but I have confidence that one day it will be a great stock. The point I wanted to make, is that certain stocks are resilient and bound to make a comeback after a "death spiral", especially those with strong fundamentals. THQ is one of these. Short-sellers should take note of the above words of wisdom, as this THQ-corpse will fight back. |
