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Skullcandy, Inc. (SKUL) Message Board

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  • onepoint272 onepoint272 Dec 20, 2012 6:49 PM Flag

    Is this stock broken?

    What I was trying to get at, is the necessity of choosing a bias in a non-trending market in order to select a strategy. We obviously agree on that.

    You misinterpreted me somewhat on price "dictating" fundamentals. No, not "dictates". What I said in effect was that price action will TELL about changes in [perceived] fundamentals before those changes become public information because someone [the big players] knows before the dumb money [that would be you and me] is allowed to know. This is not a new perspective, ie., traders-of-old Jesse Livermore, Richard Wyckoff.

    For example, look at any long-term chart and where you see volume off the top, the result is always the same. Specifically, take SKUL. One look at the price bar and volume bar of September 13th, 2012 is more important than any and all the fundamental analysis you could ever do. That action, off-the-top-with-volume, made it crystal clear that the TR beginning months before it was a distribution trading range; the big money was getting out and getting short. And it made it clear that "LONGER TERM" ,not short term, further decline was coming. On October 5th it tested the top of Sept 13th and failed on lower volume.....see ya don't wanna be ya. I tried to short that retest and for many days following, but could not get shares.....the big money had them all tied up. Did the big money know something the public did not? Probably, either that or detailed fundamentals just don't matter because what really matters is how the big money intends to make money; in which direction are they intending to take the price. In either case then, what good is detailed fundamental analysis for the retail investor? Nada. Doesn't it make more sense to just follow the money?

    I realize what I'm saying is hard for a fundamental purist to take in. It goes against all they've ever heard or thought about in regards to markets, but keep an open mind. There will be an SOS or an SOW and it will accompany some notable news item but not until the big money is fully positioned. If it comes back into the range it means the funds and specs didn't pick up the baton and run with it and the big money will work the range a while longer and try again on the next notable news item or they will call CNBC and buy some news. The point is, most everyone will think the news, the fundamentals, is what moved the stock. No, not even close. The news is just a catalyst, something for the funds and specs to grab on to and believe in. The big players have the capital resources to move SKUL anytime they want. They have the capital to keep it contained in the trading range. But they won't move it out and let the funds and specs mark it up or mark it down until they are fully positioned. Fundamentals have very little to do with this process in the context of months or even years. Think about it. If you had $50 million to play with SKUL how would you make a profit? Would you follow the fundamentals, watch Jim Cramer every night, and basically follow the retail herd. NO WAY. You'd have to get in slowly and get out slowly over long periods of time so you don't adversely affect price. You'd have to buy when the crowd is selling and sell when they are buying. You'd have to have a "LONG TERM" plan and let nothing, including those pesky irritating changes in fundamentals get in the way of its final execution.

    Finally, we may be different in our investment styles but that does not mean I am "short-term" oriented. The strategy is to accumulate shares at the low of the range and then sell some off at the top of the range and make a profit and then buy even more on the next trip to the bottom of the range. How is that short term? SKUL is in a trading range therefore that and a bullish bias is what dictates my strategy until the price and volume tell me it is going to break up or down and start a mark-up or mark-down phase, a trending phase. I'm just following the money.

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