Thursday, February 08, 2007

Take A Little Off The Top

CRVL doubled earnings and in the first 24 minutes after the opening bell it lost 11%+ right off the top. I guess there is more to "double earnings" than I would have thought.

DIS too announced double earnings and after the bell there was a wildly exuberant buying spree by what we fondly call "bagholders" and now the stock is down.

But as I said yesterday, CRVL has been looking sick lately so I'm not sure what is going on in the hidden dynamic of its trading community. Compare and contrast that to CI and CSCO, both up today. Let's take another look at those two charts.

The difference isn't subtle - everyone and their brother expected CSCO to improve earnings as did everyone and their sister regarding CI. Never were there two more as close as you can get to absolutes as these two. But CSCO flattened out just before its number came out and in fact dropped a little. Then once the number was out it gapped up and then came back down a bit. And that happened on a day when Tech was King. You can see that a lot of weak hands were cashing in on Tuesday ensuring that they had their profits "just in case". On Wednesday as soon as the gap-up occurred the sell-off began for real and the rest of the "earnings miners" cashed in their chips and got out of Dodge. Buying today is back in the CSCO trading community and it is pretty normal given the market.

CI on the other hand is investment grade material. You get in and sink down in plush leather seats and ride along like on a Lexus-cloud. No bumps, no bounces, no bruises. That's the difference a 100 handle makes. You have to have real money to play with the CI-ville - with CSCO any bum with fund can play along.

Earnings - you can either laugh or cry but you have to learn the game.

1 comment:


And a little off the bottom.