So its been since January 2014 since I have written anything about the stock market. Today, I have decided that I have had enough of the balderdash that makes up financial analysis. I am simply tired of reading reactive articles about the market. Since this blog has no readers, I will treat this as my diary and write about my feelings and emotions about concerning the pariahs of the eastern banking establishment and what they want me to believe. I also have decided to apply the theories I have subscribed to for over 30 years and invest on my own.
I am an incredible case study of a typical investor. Thinking that investing in the cloud would be my pathway to stock market success, I found a relatively new company called Service Source International (SREV). Not caring about revenues, earnings, or any financial forecasts about this company, I looked at what happened on May 2, 2014. On May 1st SREV closed for the evening at $6,25 per share. The opening on May 2 saw SREV's share price fall $1.58 or a decline of 25% of market value in this company. Most investors got clobbered that day. My reaction was simply this: Who bought? SREV typically trades 500,000 shares per day with 1 million shares occasionally trading every now and then. On May 2, 17 million shares traded. Thats nearly 35 times the daily volume. If everyone was running for the exits on SREV, who was buying or better yet who was covering their short sales?Yes, May 1 was an earnings announcement that did not fall in favor of the analysts in SREV,
Letting the dust settle to determine if the firms holding the float in SREV stock were going to drop this stock any further, I decided on May 28 to buy this stock at $4.60 knowing full well that not much would happen until the next earnings announce which was due in the beginning of August.
True to form, on July 31 2014, second quarter earnings was being announced at the close of the market. This prevents the poor idiots like me from getting out of this stock when the major firms holding shares in SREV need to drop the price so they can profit from their short covering activities.
On July 31 SREV closed at $4.43 per share. The opening bell saw SREV down $0.72 per share closing at $3.39 per share a loss of 23% in one day.Trading volume was substantial in that over 8 million shares or 16 times the daily trading volume exchanged hands that day. Again, who was buying? Some firms needed to pad their inventories for the coming demand in SREV that will be no doubt created when these firms, market makers or dark poolsm decide to start raising prices.
Which brings us to today. Tomorrow,SREV will announce 3rd quarter earnings at the close of the market. There will be no way to get in or out of SREV. Noticing the price of SREV today at $3.23,there's not much farther down SREV can fall. My guess is that positive statements about earnings will allow the firms holding substantial interests in SREV to raise prices dramatically (maybe $1,00 per share or more) on heavy volume. Zacks Investment Research has already warned investors that SREV could be a bargain.right now. Can't wait to seethe action in the next two days.
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