Buy on news/sell on fact inverted ????
Usually (or often, anyway), stock prices run up in anticipation of positive news and then sell off once the expected good news is released and in the market.
It almost seems like we've had a "sell ahead of bad news" scenario play out here over the past two or three weeks. On Friday we finally got the bad news out in the open (the announcement of the scheduling of the Sheriff's Sale of the equipment on 1/29). With that announcement, selling pressure seems to have finally abated. I would be very surprised if this can go much lower from this point ahead of some final resolution of the company's financial situation. In other words, it's as low as it can go at this point without being actually bankrupted. And that's what it's gonna take for shorty to squeeze the very last drop out of it (actually, the biggest upside for a short now is that the prospect of BK would mean they'd never have to close the trade and therefore never have to record a taxable gain on it). As far as the value of the company goes, the stock market has discounted virtually all the equity value here. Very little downside, huge upside if they get things worked out.
If you are a short seller, how much lower can you expect this to go ?? BK is the only additional upside at this point. I think the company is too close to turning the corner to positive cash flow, and if it does, there is going to be a tremendous upside here. Staying short at these very low levels is playing with dynamite.
Anyway, pretty much looks like there's limited downside, and we should get this all resolved in the next couple of weeks.
Thanks to several posters for good info on the finance and lending prospects over the weekend. Can't wait to see how this plays out....
M78
AI
