Bob:
<<taking the rest of us up and down (net worth and emotion and the size of my future yacht) in the process>>.
Boy, if SEPR continues at this downward spiral pace, you might end up with a surfboard instead -- or better yet, fish on shore instead of onboard your future Yacht !!! Just Kidding !!!!
FWIW, today's activity was in no way indicative of any institutional selling. All day long, trades were averaging <1,500 shares, except for a couple of large-size blocks (18,000 & 28,900) which crossed on the buy side. I still truly believe that this recent decline in SEPR's price is totally related to April '99 Options Expiration coming up this Friday. Analyzing and extrapolating the Open Interest in the most active Strike Prices ($120; $125 & $130), my take is that there were too many Call Options purchased by short-term traders betting on the recent FDA's approval to push the price higher, which only happened very briefly pushing the price to an all-time high of $140 7/8. I presume that the MM's inventory became too low to deliver these shares (if exercised) and the easy way out for the MM is to use his available inventory to push the price down and trigger some Sell-Stops, while at the same time, diminishing the heck out of the Call premiums. This, coupled with some Tax-selling pressure has pushed the price down to this level, which by the way, has been tested at least three times (once in mid February '99 and twice in late March '99) and bounced off very sharply.
Having said that, I would also be more tempted to say that SEPR might still dip down at the opening towards the $106-107 area, with a sharp upward reversal later on Thursday and Friday. If this is the case, then a "W" formation will become clear, with the right arm slightly lower than the left, which is technically very constructive on the chart.
By Friday, I wouldn't be surprised to see SEPR close around $115-120 area. It is still too early for me to sell my last "underwear" I have left in my Gym locker to place my bets on this strategy, but come late Wednesday, I might start selling the hell out of the April $115 Naked Puts (which is NOT recommended for the faint of heart), betting that heavy buying will kick in by this Friday and take the price back up. This has worked very well for me in the past, so let's see if this time is a charm also. Good Luck.
Mazen |
