Brad,
I know your question was to Rob, but I will reply also. That way you'll have two possible answers.
With regard to the increase in short position, don't let that worry you. It doesn't mean there are people losing faith in the company it merely means the pros saw a low risk shorting opportunity. Why was it low risk? On the day of the Oracle announcement (2/10) there was a big gap up in price with some follow through the following day. I sold my stock on the first day because I felt this gap was purely an emotional response. The whole world knew this announcement was coming so what was the big deal. There are not going to be any earnings from it for probably two quarters. It appears the pros had similar beliefs and started shorting the stock. Keep in mind at some point they are going to have to buy back that stock and when that happens it will put added pressure on the reversal.
The $64,000 question, at what price will that happen? Here's my prediction. Look for a bottom around $9, could even be as low as $8.50 There is technical support at that level. If you have access to candlestick charts, watch for a hammer accompanied by heavier than normal volume. A hammer is formed when the stock opens, drops more than its normal daily price movement, and then recovers most of the loss before the close. In fact, many times the drop and recovery happen in a very short period of time. That hammer is usually formed when the pro's push the price down just long enough to take out a congestion area of stop/loss orders. Stop/Loss orders are like playing poker with your cards laying face up on the table.
Keep in mind a hammer is only an occasional signal of the reversal, but not the only one. Also, a hammer is not a guarantee of a reversal. Sometimes it keeps going down so wait for confirmation the following day.
Dennis
p.s. Don't invest any more on the above opinion than you could afford to lose in a crap shoot. |
