SPWR

[Pascal]

Hi Pascal,



I don't mean to hijack the thread but NOK currently fits that requirement. I stupidly bought in yesterday and am contemplating if I should sell on any bounce today.

The LEV of NOK has been going up for several days while the price stayed in the same range and then fell sharply yesterday. I stupidly bought in, thinking I get a bargain. This morning the stock price fell further in Europe and reached the LB at a supply level of 3.3%. After the US market started it bounced back slightly.

I believe that the money moving into NOK is for a big part short covering. There are 6 big funds ("tiger cubs") that are still sitting on big short positions from last year according to the European short report ( http://www.finanssivalvonta.fi/en/su...Positions.aspx ).and can't be happy that the stock price went up after the last earnings release. I also believe that the sharp fall in the stock price yesterday and today was helped along by these shorts. There are a few corroborating factors: Lately good news on NOK has been underreported (NOK beat Apple in market share in Latin America but most of the financial newsletters did not pick the story up) while a downgrade by an analyst (who's been notoriously wrong on NOK in the past) has been excessively reported in the news for several days. So I suspect some manipulation to drive the price down before new (potentially good) market share data gets published in early September (but I'm paranoid in that regard).

My question is this: given that:
- the market bounce today is likely just a technical bounce and the outlook for the overall market is gloomy,
- the "tiger cub" short funds will still need a lot of time to close out their sizable positions and they apparently have the fire power to hold the market down,

would it be wiser to sell my position again today?

Thanks,
Karin

Hi Karin,


NOK indeed is bouncing from its Low supply level while large players are in no mood to sell.
However, we need to keep in mind that these charts are only part of the picture, as NOK is also well traded in Europe.
What is nice today is that the S&P500 seems to attract a few buyers. It passed through an early resistance level and heading to a second resistance level.

If the S&P500 breaks, then NOK will fall back to its neutral zone. However, The EV pattern does not show evidence that it would fall further down and break the LB level. I would keep the position and sell only if it breaks LB or if the price bounce attracts sellers.