Like life, stocks sometimes behave like a coaster. Sometimes they climb steeply but slowly, before plunging back to earth in a rush! Sometimes they do a loop, going up quickly, only to come down just as quickly; ending up right where they started. And sometimes they just ride a wave, undulating up and down in small increments.
What does all this mean with regards to CWTR? Nothing! Just thought is sounded neat! And really, you can see this behavior in any number of stocks viewed over a 5 year period.
Well today was another distribution day but nothing more than I expected. The stock continues it's march back towards it's 50 day trend line. Investor sentiment towards discretionary spending because of rising energy cost and the expected economic impact of Katrina, continue to weigh on retail stocks. At least thats what the talking heads of financial speak keep telling us. Frankly, I think a lot of this is a bunch of BS! Anyway, I look forward to seeing if the stock holds the 50 day trend line, which looks to be around 27.50. Its almost there and maybe we get a little bounce.
If that 50 day trend line is broken (and I suspect it will break) the 200 day looks to be in the low 20's. I think the stock may get there before it resumes it uptrend in October. The stock last touched the 200 day in May and promtly took off. That is the only time the stock hit that trend line in the last two years.
Barring a shock to the economy in the next few months and assuming that gas prices do not take another leep, I don't see why the stock can't hold that 200 day ave trend line.
That's my buying opportunity! I'm looking forward to going long the stock again between $22 and $24.
I agree that life (and stocks) can be a rollercoaster. But I think today's action was all related to options expirations tomorrow. We have folks who have sold a "$30" call who want very badly to have the stock stay below $30 until Friday P.M. We also have "put" customers that want the stock to drop even further to maximize their gain. We also have a considerable number of "short" position holders that want to see the stock go to zero. All this will clear up after the option expiration tomorrow. I believe the real trend is very modestly higher for now. I remain a strong "hold"
I don't disagree with you that option action has had a hand in the weakness lately in this stock, however looking at the bigger picture, this stock had simply gotten ahead of itself.
When evaluating the direction I think a stock is heading, I like to look beyond the short term technical factors, to things that are more fundamental. I tend to look for stocks I can hold for at least 6 months.
The perception that investors will pull back on discresionary spending in the coming months because of energy cost and an uncertain future with respect to interest rates is causing a pause in price appreciation of retail stocks. Take a look at some of the action in stocks other than CWTR and you will see what I mean. The sector is in distribution at the moment.
I'll conceed your options argument and I agree we could see a bounce after expirations but I still contend the trend will be to test the 200 day EMA over the next month because of the more macro level factors I have pointed to.