Price action and stocks vs options

[kevinh]

3 days of consolidation, wonder which way it will break next week.

[theotherbarry]

3 days of consolidation, wonder which way it will break next week.

Mmhm, you mean the resistance levels upward have been broken through this week? & does anyone perchance know how many shares are still shorted?

[kevinh]

Resistance is at 14.50. It's not broken yet. I'm anticipating either a break above 14.50 or a break below 13.50 (the less likely scenario).

Attached is what I'm seeing in terms of resistance

Pic 2 is the bullish triangle that has formed since the short attack. It looks like an accumulation pattern with buyers accumulating shares sub 14.50. Notice how volume has been decreasing, which supports the accumulation idea.

My belief is we are going to break above or below the triange before December 6. Upside target would be 16 followed by 22. Downside target are $12, $10, and $8, but I can't imagine how it can go sub $12 because buyers will be stepping up at that level.

[AlphaMine]

[quote='kevinh' pid='32357' dateline='1385155599']

Resistance is at 14.50. It's not broken yet. I'm anticipating either a break above 14.50 or a break below 13.50 (the less likely scenario).

Attached is what I'm seeing in terms of resistance

Pic 2 is the bullish triangle that has formed since the short attack. It looks like an accumulation pattern with buyers accumulating shares sub 14.50. Notice how volume has been decreasing, which supports the accumulation idea.

My belief is we are going to break above or below the triange before December 6. Upside target would be 16 followed by 22. Downside target are $12, $10, and $8, but I can't imagine how it can go sub $12 because buyers will be stepping up at that level.

[/quot

Kevin,

First I wanted to mention real quickly that I feel like you bring a fairly unbiased or less biased view to the board that I appreciate. I don't mean any offense to any others and I am in fact VERY long NQ stock and a call spread (dec 12.50-15).  Also many thanks to the Admin here, you have created a great resource here!  Even though I have been supporting my family for 7 years trading stocks/comm, I have still learned quite a bit here!  Anyhow I completely agree with Kev that $14.50 is upside resistance.  I have been using that number since we fell off it after earnings.  Also if we close above it on decent voliume then the next stop is $15.80 and in a hurry.  I have a question for you all tho.  IMO it seems like all of our known upside catalysts are gone with the exception of Pip Jaf or indep comit but I don't expect those until the new year.  What are your thoughts on catalysts that could move us through $14.50 because it seems like there is quite a battle going on as of right now.

[admin]

Thank for the friendly words, Alpha. The ascending triangle have a habit of producing break-outs above, if I'm not mistaken, so we might not even need any trigger.

Personally I think that it is quite clear that the MW thesis has been written in bad faith, and as such, isn't likely to hold any water. Combine that with the MW track record post reverse merger (0 for 7) and the fact that funds that did DD in China (or in Toro's case, are still doing it) have bought extensively after the MW report appeared, and I think the selling will simply exhaust itself sooner or later.

I mean, what is there to sell (or short) if the MW report is simply wrong? I think more and more people are realizing that.

I also take some comfort from the graphs of these other 7 companies I just mentioned, they recovered, but that took time. Time is on our side, I believe.

[Mountainbiker]

Thank for the friendly words, Alpha. The ascending triangle have a habit of producing break-outs above, if I'm not mistaken, so we might not even need any trigger. Personally I think that it is quite clear that the MW thesis has been written in bad faith, and as such, isn't likely to hold any water. Combine that with the MW track record post reverse merger (0 for 7) and the fact that funds that did DD in China (or in Toro's case, are still doing it) have bought extensively after the MW report appeared, and I think the selling will simply exhaust itself sooner or later. I mean, what is there to sell (or short) if the MW report is simply wrong? I think more and more people are realizing that. I also take some comfort from the graphs of these other 7 companies I just mentioned, they recovered, but that took time. Time is on our side, I believe.

I agree with Admin here. There are so many moving parts to the NQ's story. It is not simply an anti virus company. It is transforming itself into platform. Company will have news every now and then that will bring longs into the stock. There are more funds buying but we will not get the stats until Jan 2014. Time is on our side. It will trade on its fundamentals.

[Bondguy8]

Thank for the friendly words, Alpha. The ascending triangle have a habit of producing break-outs above, if I'm not mistaken, so we might not even need any trigger. Personally I think that it is quite clear that the MW thesis has been written in bad faith, and as such, isn't likely to hold any water. Combine that with the MW track record post reverse merger (0 for 7) and the fact that funds that did DD in China (or in Toro's case, are still doing it) have bought extensively after the MW report appeared, and I think the selling will simply exhaust itself sooner or later. I mean, what is there to sell (or short) if the MW report is simply wrong? I think more and more people are realizing that. I also take some comfort from the graphs of these other 7 companies I just mentioned, they recovered, but that took time. Time is on our side, I believe.

I agree with Admin here. There are so many moving parts to the NQ's story. It is not simply an anti virus company. It is transforming itself into platform. Company will have news every now and then that will bring longs into the stock. There are more funds buying but we will not get the stats until Jan 2014. Time is on our side. It will trade on its fundamentals.

Maybe this goes without saying, but the audit from Delloitte still is the biggest near term catalyst.  Many is the mutual fund/insurance community (excluding hedge funds) I believe will not buy any shares till Delloitte gives a clean bill of health.  That is just how it works.  Every one here has done a ton of due diligence, but for these large money managers the risk of being 99% sure MW is wrong is not good enough.  I am of the opinion that the audit will take 3-4 months.  So assuming Delloitte started on Nov 1 then don't expect the audit till end of Jan or Feb.  Delloite is going to be very thorough and check and double check everything.  Deloitte's reputation is on the line and they don't want to make an error on something that is so public.  Deloitte will be checking all trails of cash from original point of sale through SP  and finishing with NQ.  This takes time as NQ has customers all over the world.  This is going to be a lengthy audit.

i agree with Kevin on the short term.  I don't see any catalysts that can knock the stock back to 10 in the near term.  We have not heard from MW since analyst day and I don't think NQ left MW with anything else they could challenge.  I see a scenario where Deloitte issues the audit and MW challenges it as saying it was a biased audit...bla bla and then MW never makes another comment about NQ again.

Since we are discussing options here, I have been taking advantage of the high implied vol in Dec and recommend the same for the group as no new news should be coining out in Dec maturity.  Maybe another 13G of a new fund holding a stake or another partnerhip but that's really it.

[admin]

Yes, Bondguy, I basically agree, with one caveat. We don't really know when the Deloitte audit is going to come out. It could be sooner.

We know of a couple of funds who did their own DD on the ground in China, and they were comfortable enough to greatly increase their stake, there could easily be a few more and the buyback provides support.

[Haggerston]

when do you guys think piper jaffray will lift suspension? that will glve it a kick.
in the meantime i picked up a few more shares today as this has room to run short and long term.

[Mountainbiker]

when do you guys think piper jaffray will lift suspension? that will glve it a kick. in the meantime i picked up a few more shares today as this has room to run short and long term.

I think PJ will resume coverage after the  Special Committee's report comes out.