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Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: Jill who wrote (5708)	3/2/2005 12:34:13 AM
From: Walkingshadow	Read Replies (1) \| Respond to of 8752

There is a lot of press about the insider selling, so I think we may well see an investigation. In fact, I suspect that accounts for much of the reason the gap down was excessive in the first place---professionals concluded that the magnitude of insider selling virtually assured an investigation, which is the kiss of death on top of the bad news. Just ask anybody with the misfortune to be holding shares of KKD! Evidently the professionals are betting that ELN is toast and BIIB is not in the short term, and so took long positions in BIIB together with short positions in ELN. In the long term, both are dead money, but first we'll probably see that ridiculous gap down get partially or even mostly filled. There is a lot of scrambling amongst analysts, with upgrades and downgrades and sideways-grades flying all over the place. But keep in mind that some of the analysts were out saying that there is about a 75% chance that the FDA will reverse itself and allow both companies to continue. I suspect that for political reasons, the FDA will be in no hurry to do so, and will take its dear sweet time and be very sure of itself. Assuming for now that things don't change with the FDA, that means both BIIB and ELN especially are dead money for a year or more. A rebound and rally and uptrend from that kind of failure is exceedingly rare. The wild card is how much of that gap down the market eventually decides is excessive. Once that gets figured out (that is the very first order of business for the market), then one can start to consider short positions in both as they rally into defined resistance. Right now, resistance is neither orderly nor well-defined (except at much higher altitudes above the gap), which makes trading risky. And so, even though I am long BIIB, I won't be for very much longer, and then I will leave both alone and wait for the dust to settle. Once everybody crawls from the wreckage I'll have another look, but during that time I just don't like the risk/reward that typically accompanies that sorting-out process. T