The stock is up $7 to $55.5 on the announcement of a $4.50 dividend. Some of those investors are pop oriented, and won't hang past dividend date 4 Dec. Some will exit early that day, causing a downward pressure. Equally, there are 42% short this stock.
What we know: The price will be adjusted immediately the next morning DOWNWARD by $4.50 from the close 4 December.
The stock has had a high of just shy of $59 previously.
The co is running full bore (sorry) 6/24/365. (Hire more agnostics please!)
4 mini manufacturing centers are not running with full efficiency until 2013. How much that is part of the stock price is problematic.
The stock price swims in a sea of stocks, and that tide is riding also, on the post Black Friday pop, 10 of the past 10 years, that occurs between week before Thanksgiving and two weeks thereafter. Net gain is just shy of 3%. Hint: we're up much more than 3% BUT, we are off the NASDAQ 4.3% from the high.
Black Friday was a success, from even, to about 15% YoY, depending on who you read.
The Greek fiasco has been kicked down the road with $60B tossed into that black hole by the IMF and other financial euro players. GLWT, but the can is rattling down the road.
Home prices are 3.25% up YoY according to the Shiller Price Index. On the other hand, Bent Bernookie, who has promised low irates till mid 2015, leaves the stage Jan 2014 to be replaced by -#$%$?
Got it? Here's my thinking. The stock will budge against the old high. A flock of investors don't even THINK of speculating until that number is breached, and then appear and disappear like pharts in the wind in the ensuing two to three dollars.
The stock will reach about $60 before on Monday the 4th, it begins to sell off around just before lunch. Shorts will wait till ex div day. The stock will retreat to about $53 by 4PM. Next morning it will open up at $48.50. Shorts will take the opportunity to leave the playing field. The stock will fluctuate between $46 and $54 all day Tuesday, ending at about $51-2.
We will get a revisit to the dividend. I believe the divvy will be adjusted to reflect about 7-8%. This will establish the stock as a mainstay and encourage more institutional representation.
My timing was a little off, we peaked at $60 about three times before it failed. Friday the 30th looks to be problematic as if the shorts are waiting for Monday and Tuesday. Note how long the sine wave is and how long it takes to recover, tho it does.
Longs need to be aware that ex div drops are often dramatic and overdone. Save dry powder for those drops. Put holders will be sorely disappointed to see that both calls and puts should be resized one option below current option levels. That's a new 2010 ruling that was brought to my attention and I bow to those wiser. In an almost incomprehensible justification, the ruling forces over that rule cited "it wouldn't be fair for option holders to take a hit" as if a special dividend were any different that any other decrease in NAV. Oh by the way next math test, one and one is 11. It wouldn't be fair......
The range ex div is $46-56 imho. a $4.50 drop due to the divvy done by the marketeers who set the price at the exchange, a wonderfully confused day in which those who buy thinking their going to get the divvy ex div day battle those trying to get out, the dawn's early light when those guys discover they're not getting out, and a massive downer as a lot of the upchuck from $48.5 to $60 unwinds. Those unwinders and daytraders who never had any intention of holding post dividend are going to be battling to get out ahead of the fiscal cliff believers.
It's going to be a mess out there, as Congress plays Grinch. I await the typical whine, I bought at $56, and got a $4.50 divvy for my now $48 stock.
Like the government, the way they make $100M dollars? They start with $1B.
I'll say a pre ex-divvy high of $59.90. If you put a raff regression channel on the hourly chart, starting at the pre-announcement close, you get a high end of the channel of $59.92 at 11:30am, 12/4 (5 trading days from now).
Having said that, we may see some panic buying by the shorts that could blow through this, but so far we have only seen a steady, orderly short squeeze.
I'll play Meat. I'll cite the ATH of 57.55, back in May. I think we crack this high heading into ex-div because of shorts not wanting to pay the div and those who hit their stop levels. There are quite a few high volume days for this stock between the $40-$50 level, up above these levels I imagine there are quite a few uncomfortable short holders trying to unwind their position. So going into the ex div date, I'll use a unscientific, unproven, guesstimate of $60. I get here by simply giving shorts the benefit of doubt that they timed their short position near the top of that $40-$50 high volume range and simply add 20% or a $10 "limit" of where shorts call it a day and move onto their next trade. Momentum appears to be behind the stock and smart shorts will recognize that, taking advantage of any downtick days to get out prior to the ex-div date. They also realize that many, just here for the dividend, will be happy to sell them the stock after the ex-div date, but I think this activity will off set each other, ultimately with more buyers than sellers..stock continues to work higher. To be short you need to be convinced there is a catalyst ahead that will dampen the prospects and growth of the company. As of now it appears just the opposite is being heard. Bear position previously may have been that growth would normalize and key indicators like permit applications would begin to tail off. The bear case is being lost in a slew of positivie catalysts they thought were behind them, only the stubborn will fight the tape here and I imagine the others are trying to best plan their exit strategy.
I think the country is going to be armed to the teeth--and the coming "recovery" won't mean a thing. Here's why--the tinderbox that is America will steel itself during the crises that we are going through. But get the least bit of alleged relaxation, the nuts will come out of the woodwork. That's because the due diligence the marginal take when under stress -- their hold on sanity actually decreases when the pressure of outside social activity decreases--and they crack. That's when folks stand incredulous at the horrors and criminality that is occurring just when things look better. It's like relaxing too much before the snapping turtle holding still, one false move and SNAP.
Folks who know this are even more skittish as the economy improves--I think it is going to take YEARS before America really relaxes, and maybe, never.
So I am not worried about the long term, I think this co and the rest of the field will do just fine for all the unfortunate reasons.
On the business side of the ledger, I think there are a slew of short term investors that don't even think of getting involved until after we breach the old time highs because that is when all the indicators disappear, the technical holds on that community disappear, and the sky seems the limit. I definitely think we will challenge the old high by end of this week.
This stock just seems to move in slow motion, but I think we are going to see it allover the place Monday and Tuesday. $46-64 is now the range in my model, and frankly, I am dabbing blood off my nostrils as I make that prognostication.