My reasons for going short were:
Markets currently at the top of trading range, suggesting a reversal would be as liely as a breakout. After the FED decision yesterday market sold off towards the close, barely finishing in the green for the DOW. A down day with triple digit DOW losses looked very possible. That's why I went short. As you can see, it didn't quite work out that way, so I aborted my short position.
Limiting risk is what it's all about. It's also about getting out of a position quickly if it doesn't go your way. Thought the markets and AXTI would drop alot more than they did today, so realizing my timin was off on this trade, I covered @6.20, for a very small .06 gain. Rather exit with only a few pennies than risk going into the red just to "prove I'm right". Still watching for another shorting opportunity, but right now it could go either way and I wouldn't want to be caught on the wrong side of another move to the upside.
Once again, it's all about managing your risk.
Absolutely and we know that they have the capacity and RAW MATERIALS to do it. By my estimation AXT can produce 3-5x the volume they did in 2000-2001.
And I don't care what the inventory $$$$ on the BS say, they produced, produced, produced during the downturn because that is what they do. They can create batches for individual customers needs and sit for a long time. And personally IMHO they kitchen sinked it in March 2009. Anecdotal evidence of that is they stopped discussing fully reserved wafer #'s.
Nokia has a new smartphone coming out next week (finally), another new tablet from RIMM coming out in the next few weeks. All of these new models take tons of spoilage to create and test. Then once created tons of wafer to make. This is all on Nokia's and RIMM's dime not AXT. We are going for the long bomb now. And shorts are going to come along for the ride.
Hey Pullin, I follow your posts regularly so I know exactly where you are coming from. In actuality I think you explained the poster's trade quite well and I can't really argue with your logic, you made the case.
I am just trying to balance our short post with the facts here that we are on the cusp of a MAJOR MOVE here and people that get caught up on 5% or 10% gains whatever the case may be are going to miss the REAL MOVE.
I know the shorts hate me when I say that but it is true. Where are these guys on the big moves they only show up for the small feed after the move.
I think today and maybe tomorrow will be pivitol. The last run to $6.40 I think got very heavily shorted to get the stock price back down (we will know later this week if and how much). The price move recently was the second clear signal that stock was starting to dry up. If you watched the trading the last few days you will have noticed that the volume only moved when the price moved up, when the price dropped, sellers vaporized. We are seeing something similar to day. With the markets all down today, if AXT can hold with a relatively small loss, it should be another signal to the shorts that this play has panned out. It will take a big short to start the stampede, but at some point it is going to happen and I don't think we have to long to wait.
AXTI is just about due of a run of epic proportions. Call it a perfect-"fire-storm". Everything is lining up:
*) This thread has a story: The shorts are becoming cautious. Their house of cards is starting to shake.
*) AXT has screaming-good fundamentals
*) Bullish management
*) Sequential quarter upside earnings surprises
*) Shorts have leveraged much of the float already
*) AXTI is still relatively unknown.
*) Sector is on fire....its a great canary indicator for when to exit long. But the bird is alive and well right now.
*) Product-lines pushing the sector are expanding
*) Past investors on the sidelines, but just now starting to feel the waters again.
*) Supply/demand is pushing margins...remember back in the day the dreaded inventories which AXT could not move?
My post was in reference to the thread topic of an AXTI short at this specific time. It was finely executed IMO. I expect the OP has (or will soon) grab his AXTI-short-booty and run, or maybe even flip long.
PS: I'm more than a handful of shares long AXTI.
...even so I can appreciate a nice "against the box" trade on the side to play short-term market conditions.