MP -- CHDT ON FRIDAY
since im being freeling quoted, let me set the record straight on what i DID say and what I presently feel !
CHDT (E or not) is a stock that has been ranging between its support of 09 (sma 20) and its resistance of approx 0.117 (middle linear regression channel and middle standard deviation channel as well as the standard topside bolly bands)
The stock has broken thru a descending pennant formation on the 3 month and set a new recent high, although slammed down quickly (more later)
normally, the stock goes up for 2 days, finishes on day 3 and reverses on a selloff for 2 days, where it starts the whole process over again making for an excellent "range" play (a stock that is consolidating, but making predictable highs and lows), of which i have been trading all of the upside moves. On friday, the stock was due for a 2 day selloff from its most recent rally, and began the day in exactly that way. When the latest PR was released on friday, the stock moved quickly up to the mid 12's, and was immediately brought back down by the market makers, who had obviously not yet had their two days to cover their shorts back down to the 09 area.
Since the news came out on friday, and we know the E will be dropped, the mm's knew the stock would be hit on monday, so they dropped the stock all the way to the support area in ONE day instead of two, giving them their shares and covering their shorts, as can be seen by the "hook up" at the very end of the day friday.(a short squeeze hook) A simple test of how far they took the stock is to simply measure the length of the other selloffs and compare it to the length of fridays selling ! (almost as good as fib retracements)
If one reads the very long 10Q put out by the company, we see that revenues were PHENOMINAL, but its because that revenue is being measured against a NOTHING period the year before --- those in the know realize this simple fact, but it wont stop the stock from moving up anyway, imo ! Additionally, way down towards the bottom of the 10Q lies the fact that the company is presently in litigation and IF THE OTHER SIDE WINS THE SUIT, the company cannot pay the fines and will not remain in business --- those words are from the CEO, readily verifiable on the 10Q, so this is not exactly a rosy and positive 10Q !
My belief is that the stock HAS to rise first, as evidenced by the mad scramble by the mm's to cover and accumulate shares and secondly, because the news started a move that was slapped down by the mms before it could gain headway -- that move is only lyind doggo, waiting to erupt the stock upward !
Based on the systems I use, the stock (if it moves up on or near the open monday) has easily 60% upside movement remaining, which usually translates into 2.5 days of upside movement with a gap and sell on the 0.5 day.(this assumes normal buying per day, which should not be the case on monday -- as such, the stock may only show 1.5 days IF THE BUYING IS INTENSE !) This holds true, of course, only if the stock moves up on monday !
my caution lies with the fact that the 10-Q is NOT all rosy and loveable, and to that end i advise caution when the stock moves into overbought territory as i feel, if only in the short term, the stock will exhibit rapid profit taking.
enjoy and trade well
mp
