A Weak Bounce

By Duru

January 10, 2005


Just as I was thinking, the market obliged my ruminations with a bounce. Given its position as the most stubborn index, it was not so surprising to see the housing sector bounce the best. But as Mike demonstrates, the bounce was quite weak and unimpressive. In fact, he figures the market is due to give up the ghost any moment now! Since I think the market has probably already put in its top for the year, it makes me no mind whether the market begins selling off after a decent bounce-back rally or tomorrow. (Actually, I DO care in the sense that I still have some longs out there!).

Let's continue with the follow-ups.

On September 12, 2004, I derided a flagging survivor of the telecom bust for mass firing off its employees and clinging to its last few pennies. On Friday, this company, CoSine Communications (COSN), hit the jackpot, sort of, and essentially transferred its cash to Tut Systems (TUTS). I did not bother digging through the dirty details of the deal, but it seems that TUTS is making out like a bandit, and the market responded in kind by adding 9% to what is already looking like a very nice rally in the stock. Now we know why all those employees had to be cleared out of there. It made COSN a much more attractive acquisition, and there are fewer folks around to share the spoils!

October 11, 2004, I applauded the potential of MFLX, a small stock where insiders looked like they were loading up. Given my brilliant knack for timing, I decided to wait until the near top to try to make money from my own astute observations. Ugh!

October 12, 2004, I practically laughed to the bank at Pulte Home's (PHM's) stumble in Las Vegas as it backed down from pushing the desert's bubble ever bigger. Looks like the joke is on me (and anyone who tried to short that news) - PHM has not only recovered all of the losses from that embarrassing episode, but it also is challenging new all-time highs again. Talk about stubborn! Speaking of recovery, I noted to anyone listening that something seemed a-brew at the flash companies. Right after that, SNDK blew up on an earnings report and took the sector down with it. SNDK and FLSH have recovered quite nicely from this collapse. LEXR is still struggling.

On November 24, 2004, I picked up the speculative junk story of NVE. It seems the market has truly gotten serious about sending this company's stock back where it belongs. The sell-off has continued nearly unabated….just two rest stops where some news brought temporary hope and relief only to become good spots for new shorts to jump on the bandwagon. The first 6 trading days of 2005 have been particularly brutal.

I hope to provide updates on a more regular basis. I know it is easier to talk about news as it is happening than it is to follow that news and watch and wait for the storyline to play out. So, this writing discipline should be good practice for me.

In the meantime, be careful out there!


© DrDuru, 2005