Watch CNBC tomorrow morning before the maket opens. If you see no trading or large orders trading higher, I would interpret that as a good sign. However, if you see 100 share lots trading above today's close by a buck or a buck and a quarter, I would interpret that as a headfake and prepare to exit in the first 5 - 10 minutes.
The price you bought a stock at is irrelevant. I think this stock was shorted yesterday and will be shorted toward the close today. I'm guessing that whatever the earnings are, the stock will open higher in the premarket tomorrow and rally during the first 10-15 minutes, then get attacked by the shorts. If it stablizes, I will buy some shares on Monday. Good luck to all.
I'd consider taking some off the table today, sdt. I have exited my last positions, since I think the downside inherent in tomorrow's earnings outweighs the upside.
Specifically, the combination of a small embedded short position and a lot of hopeful but jumpy retail longs makes this vulnerable to a short attack. It was interesting that the short raiders were able to knock down GILD, even in the face of spectacular earnings.
In retrospect, any of the big banks or institutions could have stepped in Wednesday and punished the bear raiders. But they sat on the sidelines, like king jackals letting the underjackals do their work for them. Meanwhile, the hapless retail investors were dumping shares, or, worse yet, buying puts which are now worthless. There is no amount of cynicism which is adequate for this market.
"blowupaway" is another instabull, offering dubious information about a "Schwab article". Schwab doesn't have in-house analysis or publish articles on individual stocks. They disseminate Credit-Suisse research and a few other basic ratings.
The sudden appearance here of encouraging messages from new ids is worrisome. Particularly "tene 1961" who was posting virtually identical messages on the GILD board ahead of Wednesday's earnings report and the ensuing bear raid. The note made of the small short position in PCYC is interesting, since it was the combination of a small short position and a large number of hopeful retail longs which made the raid on GILD possible. GILD's earnings were phenomenal, and yet they got away with it relatively unscathed. Any earnings beat from PCYC will be more modest. I smell a rat.
Massive after hours trades would obviously move the stock price massively. What you are seeing are trades made outside the public markets - in the so-called "black pools" - which are reported after hours.
If this falls back, it will only be momentarily, I think. Nevertheless, it makes sense here to put in some trailing buy orders just in case they dunk it at the open.
Nah, the only real shorts are the gullible retail speculators who bought the May puts last week, thinking that "They must know something." On the 70, 75, and 77.50 puts alone, they're down about $2.5 million today. In reality, of course,all of these puts will expire worthless and about another $15 million will go into the pockets of those folks who sold them.
At this point, watching the relentless runup, can anyone doubt the reality of my paranoid scenario?
PS According to my calculations, the sellers of those puts have made $1.7 million today on the drop of those May 70's, 75's, and 77.50's alone. Obviously, those puts are all really worthless now and will be below the horizon upon expiration.
This is only relevant to the folks who got suckered into buying puts by the short attack on earnings day. One of the ways this little venture was financed, of course, was by selling puts to the gullible who deduced that "They must know something." You can bet that they were buying the calls at the same time.
Joec, I'll guess, is long this stock via some call options, which are now deeply underwater. He displays the salient characteristic of many options speculators: Obsession with daily price movements combined with a blithe disregard of the fundamentals. He has lost some money (probably not too much) and since inthe past he may have drawn some encouragement from your positive outlook, he has now decided that the whole thing was your idea. The fact that the entire biotech sector has been pounded since Feb 25 is irrelevant to him.
A 1.64% short position is relatively tiny. The fact that it was so small - probably even smaller than1.64% on earnings day - is why the stock was vulnerable to being driven down by those who, rather than being short, were just not long enough. If we had a short interest of 7-8%, for example, those positions would have beensqueezed and driven the stock up to the 80's on the huge earnings beat. Incidentally, not all short positions are necessarily bets on the stock dropping. Sometimes they're just a way for longs to lock in profits until they're ready to sell. Or a consequence of folks buying puts, as no doubt many poor retail speculators did last week.
Yes, I think the takeaway is that you have to trust your own judgment. One of the reasons why it was vulnerable, I think, was the absence of a large short position - everyone knew they were going to beat the estimates. To get a real runup on positive earnings news it helps to have a substantial short position and folks with deep pockets who are ready to punish the shorts. Unfortunately,as long as the sector is pulling back, the common attitude is, "Yes, I want to own this stock. But I don't necessarily have to own it right now." In this case, the earnings, I think, were so impressive, some large entities realized that they did have to own it and bought an entry point for themselves.
I have seen instances where a stock disappoints to the downside on earnings and is run up. These are usually smaller cap stocks where there is a large retail short position -- not too common these days. An institution with a major long position would simply buy into the bad news and drive the price up to force the shorts to cover . Then over the course of several trading days they would walk the stock down with intermittent rallies to take out the stops of the remaining shorts. Essentially, they sold their position to the retail shorts. Just as in this case, even though the retail investor has guessed correctly, he finds he is losing money and thinks, "They must know something I don't."
While not wanting to puncture the euphoria, I would note that among my greatly reduced biotech positions, today: PCYC +5.51%, INCY +7.83%, MDVN +4.62%, NPSP +6.86%, REGN +6.31%, ... Looks to me like the 2.79% jump in the IBB took out some short positions.
PS Note that on last Wednesday, when they reported their blowout earnings, went from 72.86 to close at 73.86, roughly a 1.25% gain for the day. The IBB, the major biotech ETF, went from 230.35 to 234.72, roughly a 2% gain. In other words, in relation to the biotech sector, GILD actually FELL when they beat their earnings estimates by a huge margin. Strange?
That's my theory. Some theorized that there was a major short position being defended, but that would have been too risky; at worst they would have been both long and short, prepared to play it either way. And,Mr. Phelps, I did follow their lead and tripled down on the earnings day selloff. When every single analyst on the Yahoo! earnings page (27 of them) increases their earnings estimate, why would the stock not budge for three days? Because they were busy selling off the downside of the stock to the gullible in the form of put options.
Here through Friday. Fortunately, the market closes here at 10am, so I'll be on hand for the drama. I am holding my shares in the IRA, planning to add more on earnings day, perhaps on a selloff, or, hopefully for you, on a brief profit-taking dip during a big runup. Good luck.
When GILD blew out even the most optimistic earnings estimates last week, the rally was stopped in its tracks at 76 and the stock was eventually pushed down into the 73's before closing up a mere one point. Disappointed retail investors, thinking, "If the stock only rallies a single point on news like that,there's obviously something wrong. I'd better sell." What was wrong was that major entities were shorting directly into the teeth of the rally. If they'd bought, they would have had to pay 78+ for their shares. They continued to short in the succeeding session, which created the opportunity for them to buy their shares under 75 as they covered their shorts.