XpresSpa Group Inc (XSPA)

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Vringo Stock Chart

The shorts dinner bell rang when the judge ruled and the stock surged to $4 that day. Since, they have done their tried and true grinding of the stock lower. We have seen this since the summer although it appears with rising short interest that the task of pushing the stock down has become more difficult. Here's the most recent short term chart:

http://stockcharts.com/h-sc/ui?s=VRNG&p=D&yr=0&mn=3&dy=0&id=p08015010268&a=274722983&listNum=3

The amount of risk for Vringo has contracted substantially since the summer. Back then, it was the question if the Judge would rule summary judgement and throw the case out AND could Vringo show they infringed on any of the claims. Today we know Google infringed not on 1 or 2 but all 14 claims across two patents. I still am not sure why royalties last only through 2016 as the two patents expire in 2018 and 2021, respectively. My suspicion is because they are continuation-in-part patents to a 1996 filed parent patent.

The shorts can try to grind this stock lower but their risk is going up each day we get closer to a final judgement, which could be 6 - 8 weeks away. Today the stock has now bounced twice off of the 200 dma/Fibonacci support line. Shorts had about as much fire power to the downside today as they have had in weeks i.e. stock falling from $3.75 to a low of $3.28 AND having the best Google's lawyers were able to muster which is that the jury calculated their number right and the rest of the defendents wrong. (That's going to be a tough hill to climb since the Judge said to the Jury to use Dr. Becker's methodology as none other was presented; which clearly supports much higher past damages for Google.) Despite momentum and throwing more uncertainty into the mix fanning the flames that the total award to Vringo for past, present and future damages is $120 million, the stock held firm with light volume.

The risks I see for shorts is that 1) strong support exists at $3.30 area, 2) large short interest and 3) Vringo now gets to have their say on the subject of past damages, which should only be stock supportive. The shorts do have one clear advantage here in that $3.75 is very strong resistance and $4.00 is clearly a place where the stock will not hold unless something positive fundamentally comes out for Vringo.