Kent can you say the word short squeeze, the Avanex die hards at raging bull are getting excited.
Shorting this stock would have been a no brainer at times. Staying long, and keeping the focus on the long term story, takes positive conviction, and foresight.
To put it simply, selling this story short, is short sighted. I could have shorted Avanex, I didn't, because I have a fair amount of confidence in what they are doing, and am impressed with the level of vision, behind their product development.
We as investors, have a fight on our hands, but to be fortunate enough, to be in at the ground floor, for the build out of the 21 century, is amazing.
Yes we know there are more bumps in the road are coming, as we go through earnings, over the next few quarters, but the worst of the first round, may be behind us, with the recent NAZ bottom holding on Friday. Wall St. has pretty much milked the short side in the tech stocks, for the moment, and probably sees better opportunities on the longside, for now.
If Wall ST. had let the NAZ go through the floor, they would have left no room for the mkt to absorb, coming negative earngings, or some level of extreme disappointment, not factored in yet. In which case, Wall St. could have set itself up for a horrifict melt down, that would be far more difficult for the Global mkts, and the economy to recover from.
Instead Wall St., did its normal thing on Friday, and took us right to the edge, one more time, and backed off. Probably smart money has been picking up shares in xyz, during this. We shall see if the direction of the mkt., has changed Monday, and they run the futures up, for the start of the new quarter. Anyway I'll be there on the long side if they do.
I can accumulate alot more shares at 10+, than I could a while ago, and so can someone on the short side. But the pressure is on the shorts now, to really pound the table desperately, not just stating the glass half full, but the glass completely empty, which as you say isn't even reality.
Think about it, if your short, this is where you can make or loose huge money. If you can scare people into selling from 10 down to 4 or 3 you just made a 60% to 70% return on your money. Now figure you have accumulated a war chest shorting all the way down from 80. Well this is it, short one more time, let it all your winnings ride, and get 70% more on your Avanex war chest. Not. The more we go down from here, the greater the risk for the shorts, with alot of shares short for cheap money, they have no where to hide, when the buying starts.
I am still playing things by ear, making it up as I go along, as events unfold. I need to pay bills so, I will still trade in and out as I see fit, but at the same time, I will also start taking long term positions, but I will save some capital, for a latter possible down turn, as we face more possible bad news, in this sector, over the next few quarters.
There maybe only so much buying going forward, because of the visibility thing, but I think alot of investors and money managers, will be wanting to nibble in here if the futures co-opperate. So I guess its the big boys move, not just Greenspan, or the govt, but Wall ST, the one who premoted all this over valuation in the first place.
Kent, thanks for setting me straight on Avanex's cash on hand status, I should have looked it up, rather than trying to go from memory, I was off a 0, approx. 200 mil versus 2 bil. |
