Tuesday, June 26, 2007

The Pink Elephant in the Room: MVIS

If you think MVIS is going to blow up, and you are wondering what the heck I'm doing with 6K shares (over 25% of my capital) invested in it, then read this post here.

Frankly, I'm rather surprised at the Schadenfreude exhibited in the blogosphere since MVIS has been selling-off.

If you are new to trading or holding a stock that has tripled in 9 months and then gets diluted by 25%, file this recent experience under "Sell When This Happens." When stocks get diluted, they almost always get punished. It's an easy short and a very high probability one at that. I was hoping it wouldn't be as brutal with MVIS, with expectation of the contract announcement mitigating any impact. That being said, several months ago I made the decision to hold my shares until a contract announcement is made. While it hurts to watch MVIS take the hit, what is happening is certainly not out of the ordinary, and does not change my conviction to hold until the announcement.


A 9 month chart can also provide some perspective.

After moving from $1.35 in October of 2006 to $5.90 in June, and then getting diluted, a correction to the first Fibonacci level (a 38.2% fall from the high) looks probable. I would not be surprised by a quick Wednesday morning move taking MVIS down to the low 4s, but I fully expect a bounce by the end of the day as all indications point to it being oversold at those levels. I believe we will see some basing action taking place in the $4.40s to $4.70s.
However, another possible outcome is a 50% retracement of the Oct-June move, taking the price to the $3.60s, leaving the stock at long term support levels. I do not think this is as likely as the scenario above.
Keep in mind that the correction from the January highs to the February lows was ~30%. It hurts, but it is not the end of the world.

14 comments:

Broker A said...

No worries. We will eat large turkey legs, once this fucker breaks out again.

Brent said...

I love the "internets" late at night. Very peaceful.

Woodshedder said...

I once, with some friends, tried to cook a whole Emu during thanksgiving. We were all partying, having a great time, and went to put that bird in the oven, and it wouldn't fit. It was hilarious at the time. We ended up breaking the legs off of it, and then it fit. True story.

Woodshedder said...

I think we are beginning the basing action. I'm seeing the sellers place their big orders of 50K on the ask, rather than dumping at market. Also, the bid is building strength. It is 10:41 as I write this.

Broker A said...

Warrant holders are pussies.

nncoco said...

You lost me at Fibonacci.

Just kidding. I like to trade this way too due to the fact that I can't stay awake through a 10K.

Woodshedder said...

10K's are without a doubt crucial, but I'm with you as far as they are a real bore. Plus, after they are issued, and everyone reads them, what difference do they make? I'm a chart chomper, absolutely.

Caffeinated said...

Very nice work/balls today. Hit your ads many times - as much for the $2.5k SMSI earlier - as well as the obvious. Will be back later.

Dinosaur Trader said...

Schadenfreude! LOL!

-DT

Danny said...

now that you've been blog whored, are you gonna update several times daily?

how will you handle the huge influx of goddamn morons talking shit? .

Congratulations on your new balls and healthy gait, btw.

question brah- why do you like SWHC. not facetious, just I don't see a gun ownership catalyst. chart is great. I bet that's it. Have done no dd, jus' wonderin', whyyyy

Woodshedder said...

Cafe, I was waiting for an update and hoping the trade worked out well for you. Sounds like it did!

Thank you Danny. I've yet to show them off to the wife. Maybe I'll wait til the sun goes down so they don't scare her.

SWHC- huge earnings growth. Increased guidance 08. I've read about a possible deal with the military for pistols. Basically, it has been a turnaround story, complete with new products (guns). C'mon, this is America, after all.

I bought some back at the last low, around 12-13, and have hung in there trading it a little bit. Today I added 250 shares to my position. It is in the IBD 100 I believe, although I haven't picked up the paper lately. I just remember hearing that.

Danny said...

good to know.

I like guns, I really want this one, to match my car.

red IBD 100, I just checked, it's not in there.

The main reason I remember SWHC is it was like the first Cramer I saw and he recc'd it at like 5 or 7 or something, so hearing the name always piques my interest.

Danny said...

oh, and fuck the police

Woodshedder said...

Boone, SWHC made IBD 100 the first time it passed 15, then was dropped when it didn't hold 15. There was some speculation that it would make it again over 15. Thanks for checking.

I was in it at 6 and change, and then pulled a shedder and bailed too early and missed the big move.

That cop video is awful. What a big steroid eating bald and shrunken testicled bastard. Do you know if anything ever happened re: police brutality?