zeev - your observation ...
I wouldn't ever argue with your reading of the charts from a technical perspective. The problem is, occasionally you have a tendency to extrapolate your reading of a chart, to the business fundamentals without doing the research or knowing the business. I know your theory that price action is directly correlative with the quality of the business -- and that you regard price action as a more perfect reflection of the health of a business than the limited information that is public at any moment, and thus a leading indicator of the fundamentals.
While I agree that is sometimes the case, it is most certainly not universal. The flaw in the theory is the assumption that markets are all about reflecting perfect information, not taking into account that there are artificial forces and pressures deliberately applied at times. A perfect example from among the stocks you follow here is CELL. The price action was not reflective of their business going to hell in a handbasket and then just as suddenly being turned around and made spiffy.
In the case of UTSI, their management has refused to play ball with Wall Street the way the big sell-side houses wanted them to, and so they've been "taught a lesson". They've capitulated to some degree, agreeing to fork over money to a big consulting firm to "fix" supply chain "issues". And they've begun to spent more time doing dog-and-pony and kissing Wall Street butt. But Wall Street thinks it can force these guys into a negative enough cash flow position they'll be forced to do secondaries, replete with nice fat fees. It thinks wrong. Not gonna happen.
One more dynamic ... you've been around markets long enough to know that from time to time the NY investment houses like to assert the playground dominance, gang up together and "raid" one of the non-NY houses or firms. It used to be they mostly nailed the California and west coast bunch. Kind of a "you're not for real, and we are, and we're going to show you by taking some of your money" deal. In the case of UTSI, the gang-up was on BOA, which bought nearly half a billion in UTSI stock at $42 a share directly from the company, looking to package it for resale higher. The NY boys weren't happy BOA wasn't reading off their script of needing to teach UTSI management about how to play along, and figured it was a chance to get a 2 for 1, and put the vice grip on BOA. And did they ever.
There are many ways to make money in the markets. You do a phenomenal job as a pure momentum player. Others are more workmanlike in following a Buffet-type approach to finding mispricings - where the current market priced, for whatever reason, is NOT reflecting the tone or performance of the underlying business - buying, then waiting until those two things come into equilibrium again. If price action was really the perfect leading indicator of private information not yet made public, Buffett would have a small fraction of what he has today.
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