Monday, March 01, 2004
=== UPDATE on IDSA & DNA ===
Industrial Services of America (IDSA)
Analysis over the weekend indicated
that IDSA would likely move to about
$43 short-term, indicating that short
squeeze continues. This expectation
proved true, as IDSA shot up to an
intra-day high of $47.5 before selling
off to just above $38 and then rallied
from there to close at $42.16 for the
day. A re-test of the $47.50 price is
probable to likely. The longer term
outlook for IDSA remains extremely
BEARISH. Those who scale in their
shorts piecemeal and keep high cash
reserve will be richly rewarded. As
usual, whenever possible, new short
positions should be established at or
near the intra-day highs or any rally
thereto.
When price movements are extreme
and hectic, trading takes priority and
ProfitProwler(tm) posts, which are a
public service, must necessarily be
delayed. Moreover, once the market
is closed, more delays would not be
material. Oftentimes, the analysis
will become obsolete after passage
of time. For example, early Friday
morning (2-27-04), we foresaw the
short squeeze in IDSA and therefore
waited for it to take prices higher.
The same happened this morning.
While it is unlikely that $47.50 is the
final top, some more averaging up
at or around that level in the near
future is not imprudent as part of a
piecemeal, scaling-in of short-sales.
Genentech (DNA)
The gap-up rally on Friday, February
27, 2004 caused by FDA approval of
DNA's new drug was promptly taken
advantage of later in the day with
more short sale of stock and the
purchase of DNA puts. This has
produced some profits by the close
of Friday, and again today, as DNA
dipped by $1.64.
At this point, the risk exposure from
bearish positions in IDSA and DNA
remains exceedingly well controlled,
allowing further short sale or other
bearish plays if either stock should
continue to shoot up. For instance,
should IDSA move to $100 or even
$150, before topping out, the cash
reserve will still comfortably handle
it in the scaling-in process. This is
enhanced by the fact that a fairly
accurate assessment of the next,
immediate price movement is done
before the next day's open, and it
is usually reliable and sufficiently
accurate most of the time.
As of now, the chance of DNA making
a new year high, short-term, is quite
modest. IDSA appears to remain in
the short-squeeze mode, at least for
now, though also a bit tired. Sharp
price moves in IDSA from squeezing
the shorts are accentuated by lack
of liquidity and unavailability of IDSA
listed options. Shorting IDSA is both
a challenging and an interesting case
from which useful exercises of tactics
and know-how can be applied in a
totally realistic fashion, with useful
knowledge and insight harvested.
IN SUMMARY: Be prepared to average
up in short sales of IDSA and DNA and
in options of DNA. Remain modest in
risk exposure, and only scale in new,
additional positions at or near intra-
day price peaks. A re-test of IDSA's
new high is likely soon. DNA probably
will re-test today's intra-day high of
$108.6 or thereabouts, but likely to
make no new highs. Near-term, DNA
is expected to to close its recent gap
of Friday (2-27-04). IDSA has more
short-squeeze potential compared to
DNA, but it will ultimately implode in
price rather spectacularly when the
short squeeze of IDSA finally ends.
Industrial Services of America (IDSA)
Analysis over the weekend indicated
that IDSA would likely move to about
$43 short-term, indicating that short
squeeze continues. This expectation
proved true, as IDSA shot up to an
intra-day high of $47.5 before selling
off to just above $38 and then rallied
from there to close at $42.16 for the
day. A re-test of the $47.50 price is
probable to likely. The longer term
outlook for IDSA remains extremely
BEARISH. Those who scale in their
shorts piecemeal and keep high cash
reserve will be richly rewarded. As
usual, whenever possible, new short
positions should be established at or
near the intra-day highs or any rally
thereto.
When price movements are extreme
and hectic, trading takes priority and
ProfitProwler(tm) posts, which are a
public service, must necessarily be
delayed. Moreover, once the market
is closed, more delays would not be
material. Oftentimes, the analysis
will become obsolete after passage
of time. For example, early Friday
morning (2-27-04), we foresaw the
short squeeze in IDSA and therefore
waited for it to take prices higher.
The same happened this morning.
While it is unlikely that $47.50 is the
final top, some more averaging up
at or around that level in the near
future is not imprudent as part of a
piecemeal, scaling-in of short-sales.
Genentech (DNA)
The gap-up rally on Friday, February
27, 2004 caused by FDA approval of
DNA's new drug was promptly taken
advantage of later in the day with
more short sale of stock and the
purchase of DNA puts. This has
produced some profits by the close
of Friday, and again today, as DNA
dipped by $1.64.
At this point, the risk exposure from
bearish positions in IDSA and DNA
remains exceedingly well controlled,
allowing further short sale or other
bearish plays if either stock should
continue to shoot up. For instance,
should IDSA move to $100 or even
$150, before topping out, the cash
reserve will still comfortably handle
it in the scaling-in process. This is
enhanced by the fact that a fairly
accurate assessment of the next,
immediate price movement is done
before the next day's open, and it
is usually reliable and sufficiently
accurate most of the time.
As of now, the chance of DNA making
a new year high, short-term, is quite
modest. IDSA appears to remain in
the short-squeeze mode, at least for
now, though also a bit tired. Sharp
price moves in IDSA from squeezing
the shorts are accentuated by lack
of liquidity and unavailability of IDSA
listed options. Shorting IDSA is both
a challenging and an interesting case
from which useful exercises of tactics
and know-how can be applied in a
totally realistic fashion, with useful
knowledge and insight harvested.
IN SUMMARY: Be prepared to average
up in short sales of IDSA and DNA and
in options of DNA. Remain modest in
risk exposure, and only scale in new,
additional positions at or near intra-
day price peaks. A re-test of IDSA's
new high is likely soon. DNA probably
will re-test today's intra-day high of
$108.6 or thereabouts, but likely to
make no new highs. Near-term, DNA
is expected to to close its recent gap
of Friday (2-27-04). IDSA has more
short-squeeze potential compared to
DNA, but it will ultimately implode in
price rather spectacularly when the
short squeeze of IDSA finally ends.
