AR,
Good post and a lot of food for thought.
Well I guess you've read the new proposal from LCA Vision, the reverse split is off. Reading from the LCAV Yahoo Message board, the bad news is gone and the stock price is going to move higher.
Two comments, first the technical picture is not good for this issue. Once you have experienced a "cascading" of precipitous proportions ($3.75 to $1.13 or 30%) in 26 days, you don't see an automatic price retracement back to the breakdown price, even though the main reason for the price decline (Reverse Split proposal) has been removed.
To be successful in business, you have got to have business acumen second to none. The decision to first deny the intent to impose the stock split and then to cancel it altogether does not show good business sense. What ever the reason was to propose the reverse stock split in the first place is still there. Canceling the reverse stock split does not remove the reason for the proposal. I know that Dr. Joffe does not understand the complexities of the stock market, and could not have known that the mere mention of a split would severely depress the stock price. Now if he thinks that by removing the split, the stock will soon return to the market cap of 7/27/98, it just won't happen. Once you cause the loyal and stalwart investors to bale out because of fundamental and technical reasons, you won't entice them back until you correct the underlying problems.
Second comment, we are entering into a period of economic contraction which will depress all businesses that depend on the superfluity of cash as was evident in bull market times. As this bear market continues, there will be a decline in stocks of this sector. Take a look at the charts of the Eye Care Sector, and see that they are all down. That should tell us something about weakness of this sector. I see no immediate need to but any of these stocks until the fundamental and technical "picture" improves.
Currently I look for the price of LCAV to stall under $2.00/share, and make a retest of the lows down to $1.00.
Harry |
