It goes without saying that predicting the market reaction to news is an arduous task. In early action we have the equity actually testing $2.90 and even popping up above it, a move that I did not expect. This presents an interesting dynamic. I still feel that this equity can run down to test the 13 day average at about $2.80, but right now we are seeing a different story.
At this point I have to cede to the thought that there are many that saw a Karmazin exit as an opportunity to capitalize and buy in. The volume is strong, so if this is a head fake it is happening with a ton of cash.
My initial thoughts of a sell at the open and wait until $2.80 are now severely challenged. I have been cautious for about a week now on the concept of active trading and have been consistent that trying to pick up a nickel meant being willing to lose one.
Going into this week I had felt that the pending conference call would have the street finalizing positions this afternoon and had written about the fact that all CC bets would be in today. What I am seeing now is that this action is making that happen.
I see this as bullish. Essentially the street is betting on a call that will deliver the goods the street wants.
Watch volume closely to see if it begins to evaporate. I will keep a close eye on the action.