Winston,
Read and learn. This was (and still is) a classic short squeeze.
(Excerpt from TheStreet.com - subscription required)
thestreet.com
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Internet ad firm DoubleClick (DCLK:Nasdaq) shot up as
much as 44% yesterday before giving back some of those
gains to end at 64, up 29%. A hearty 3.9 million shares
traded hands as some stale "news" from Tuesday made it
onto some investors' radar screens.
The cause of the three-alarm fire? A DoubleClick press
release Tuesday morning announcing that it had the Web's
third-most popular site. Activity in the stock was pretty quiet
that day. But yesterday morning, as the word got out, the
stock began to pop. It started the day at 49 and change,
quickly found its legs, and by the early afternoon, "we got
into a buying frenzy," said one day trader at Broadway
Consulting.
As the buying became a frenzy, it turned into a classic short
squeeze. The higher the price got, the more the shorts
wanted a piece of the action. But with a fast-rising, illiquid
new name like DoubleClick, even the trading desks found
themselves short. This drove up the price, which attracted
more longs ... and awaaay the stock went. By 1 p.m. it had
soared to 59, and hit 71 1/2 a mere 46 minutes later.
"In [less than an hour] it gained 21, and the shorts got
squeezed," said Broadway's day trader. "It was difficult to
get in to short when it was up at 70." There were more than
1 million shares sold short as of the end of June, up from
238,000 shares at the end of March.
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Chip |
