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Sturm, Ruger & Co. Inc. Message Board

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  • mardermj mardermj Nov 28, 2012 4:22 PM Flag

    what happened

    Daytraders are attracted to this stock because they believe that since we are above old highs, the sky's the limit, because there are no technical stops above this polnt. I won't even get into the logic of that supposition, but that is where we are now. Get a bunch of those guys together who think they literally need to "call it a day" and you have a "retracement" which is genuine Wall Street drivel for , it went up this morning, it's going back to at least half way tonight.

    There are about 11 days worth of shorts to cover, and that was as of 15 November. I am sure there are at least four more days of shorts sweating it out--we picked up a bunch in the last ten dollar move. Their problems mount around the morning of 4 Dec and last all day long, they have to exit the playing field along with a whole bunch of oldies but baddies, before ex div, lest they also be liable for the special dividend.

    There's going to be a lot of folks exiting the playing field the week of the dividend, so I expect to retrace at least half the pop, unless the co has some kind of other special announcement. I can see the stock all the way back, to $48 and not blink an eye. And yet I can see the shorts holding up their end and trying to get out that same period, it takes a lot of nerve to hold for the long pull. I know one guy who shorted XM radio at about $12, ran in the hole till $40, and made out like a bandit when it hit the single digits. It took him three years.

    My feeling is, this stock has run up to $58 and down to $34 before, I don't see that happening. but halfway, to about where we started before the special dividend, I don't have a problem with that happening, on the way to going to the moon again, starting late summer of 2013.

    There's a guy here who sells covered calls against his position to guard against just those kinds of exigencies. It helps to keep even keeled through the troughs. I like that.

68.00-0.70(-1.02%)Jul 29 4:02 PMEDT