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Piper Jaffray analyst Ahmar Zaman took over coverage of VECO on July 15th, reducing the firm's rating on the stock and slashing both its price target and EPS estimates. He cited "uncertainties around order momentum" as the reason behind his actions. On the 15th and 16th of July, VECO shares lost $5, or approx 11% following Piper's downgrade.
With VECO's report yesterday, we see that the company is doing far better than Zaman expected, and its guidance negates any of Zaman's fears.
But were they really fears at all, or is something else going on?
Ask yourself the following questions...
Is Zaman completely and utterly inept after years of expensive education and office experience?
Can Zaman do the third grade math required to make the right call on the LED sector?
We happen to think that Piper Jaffray (and all other Wall Street firms) know the deal.
They want lower prices.
So is Zaman incapable of conquering third grade math, or did Piper want to pick up shares of VECO as cheaply as possible ahead of its earnings report?
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To answer this question, we need only to look into Piper Jaffray's recent past.
To answer this question, we need only to look into Piper Jaffray's recent past.
In 2005, Piper agreed to settle with the SEC, NASD, NYSE, NASAA and the New York Attorney General in a landmark securities fraud case in which Piper had released "biased research designed to benefit its own business."
If you google "piper jaffray fraud", you will be astonished at the sheer number of these incidents.
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So what should we believe happened this time? Should we believe analyst ratings? Should we follow financial "news"? Is it designed to help the retail investor? Are they just being good samaritans, pitying the little guy and lending him a helping hand?
Part of the purpose of this blog is to expose how Wall Street really works, and leave you to draw your own conclusions.
31 comments:
So why do they upgrade stocks like RBCN? So they can inflate prices and then short them like today? Anyone have a time machine? I love just crashing down with the stock after a large gain, making a not so great gain.
Snot,
Piper Jaffray is not interested in buying cheap shares of VECO. They make money by manipulating the share price at options expiration. Why else would they publish a false report the day before OE? It should be obvious to anyone including the SEC. I am sure you remember what they did to LDK after their big run up and great earnings report on 20 December 2007. That also was the day before OE.
Analyst can write anything they wish with immunity. Piper combines it with naked short sales to drive down the share price so that the options they sold expire worthless.
Anon, you're right, it was an OE thing with LDK, and most likely another one with VECO. Forgot Piper was into the options end of it. Either way, it's all manipulation, regardless of the derivative they use. Today was a wild day, huh? Guys like O'Neill and Buffett would pay it no mind. We're only supposed to be looking at weekly charts. We are only to look at daily charts for the purpose of using the shortcomings of the traders to our advantage. Hopefully there are some buying opportunites at the open. Despite the unexpected down day, we still believe that the market is on an upswing that will continue.
Worst reacting ascending triangle I have ever seen. Going from the top of a channel to the bottom in 2 days, brutal...
Been waiting to buy RBCN when it cracks under $30. It sure is one stubborn pig at that level.
All of my buys have been when it touches 50 day MA. Problem is I never remember to sell. It loves that 50 day MA
Please advise what is the price for 50 day MA.
50 day MA is 30.
Easiest place I've seen to get moving averages on a stock for free is stockcharts.com
No shares available at my broker to short AIXG or RBCN, but plenty available for shorting MRVL, VECO, and CREE. What does that say?
RBCN with 50 and 100 moving averages RSI Williams % and Stochs
VECO with 50 and 200
CREE with 50 and 200
Joe, Whats your take on all of this? I personally have buy set at $29.69 holding my original shares purchased at $24
There it is, another slug of RBCN @ 29.95. Hope to dump it @ 35 on or before earnings next Thursday.
My chart shows 29.68 for the 50 day. Low today was 29.71. Pretty close. Hope it holds.
I've been out for some time. I'm over in the pasture riding the old gray mare that can't gallop any more, but she's kind of safe (BLV, BND, BNA, VHT, VTV, VIG, VDE, FFA, cash). I'm watching from a distance as you guys with titanium orbs ride the thoroughbreds out on the race track. I think Snot's advice is wise: take some profits before earnings. Even if it pops after earnings, there will always be an opportunity to buy back. I took lots of profits yesterday after the great run we have had the last week or so and today I was happy for it. I'll stay conservative through Friday at least (40% cash; 30% bonds, 30% equities). But remember, everyone has a different trading style. I'm mostly a short-term channel ETF sector trader. Icon, do you think UUP is a buy here? Looks like bullish divergence on the RSI to me.
Yesterday RBCN hit 35.90. Today it hit 29.71. That is a drop of -17.25% in only two sessions. One would think that it's in store for an oversold bounce over the next few days at the very least. Unless of course RBCN's earnings report has been leaked and the cheaters are jumping ship ahead of time.
GLTA new buyers and die hard holders of this one!
I haven't seen any comments about the large short interest on RBCN (57%). What gives here?
Whoa. 57%. Are you kidding? Yikes.
That's fantastic news! Any type of positive earnings report and the shorts are going to be forced to cover. Squeeze the suckers!!
57% is misleading. Total shares outstanding is 20.27M, of which 6.67M shares are short. (As of 7/15/10). That equates to 32.9%.
Still a big chunk, but have the shorts been making any money on this one over the last 18 months? Looks like one heck of a short squeeze could be in store when they finally get sick of watching their losses do nothing but grow.
I barely have enough courage to be long RNCN. The only way you could get me to short it would be if you got me drunk on Jim Beam first and then blackmailed me by threatening to shut down my air conditioner.
RBCN Today touched the 50 day MA, also the bottom of the channel on both the daily and weekly charts. All in 1.5 days, wow... Tomorrow appears to be very crucial for this stock
vxx is finally back in low 20's. i've been layering in as a hedge, but haven't got nearly enough yet to cover my long positions in the event of catastrophe.
8888888's
There is a big windup that's clearly visible in the weekly chart. A 30% move from here is quite likely by the end of next week. Between RBCN's earnings and 2Q GDP, now is an extremely volatile time. I am looking for a -0.5% 2Q GDP print, but I just dont see how we could have rallied so hard in the last few weeks based on that. This rally has me thinking GDP is going to be 3%, which I would never believe even after I see it. So I am moving completely to the sidelines, except for my Ford 11 puts that I assume will expire worthless.
RBCN is Dr. Jekyll/Mr. Hyde!
Any river boat gambler bottom fisher types on this blog? Check out ASIA which got slammed on earnings. Also, ONP has been crazy fun for daytrading, but also crazy dangerous or crazy profitable if you hold it overnight.
APKT getting punished after hours after earnings release. RBCN could suffer the same fate as their charts are identical.
Acme Packet Reports Record Results for Second Quarter of 2010
Last update: 7/29/2010 4:05:15 PM
- Company Posts Record Revenue of $53.3 Million, Up 62% Year-Over-Year --
BEDFORD, Mass., Jul 29, 2010 (BUSINESS WIRE) -- --- Company Posts GAAP EPS of $0.14 and Non-GAAP1 EPS of $0.18 --
--- Company Now Expects 2010 Revenue Growth of 53% and 2010 Earnings Per Share Growth of 109% --
Acme Packet, Inc. (APKT), the leader in session border control solutions, today announced record results for the second quarter ended June 30, 2010 and raised its business outlook for 2010.
How can a company that announces record quarterly results AND raises 2010 guidance get hammered by -13.5% after hours??
My guess is the incredible run up YTD on APKT before earnings??
8888888s, thanks for the reminder on VXX. I bought at the close yesterday. It pops at the open today for a quick profit.
APKT is in the early stage of its growth cycle, where investors don't really know its future. Hopes ran high that it would post impressive earnings beats in the quarters ahead, so traders priced it accordingly. Instead, its rev outlook shows that they will likely only narrowly beat future estimates, which means it was bid up on false expectations and needs to correct. The danger for investors in APKT now is that they have to come to their own conclusions as to whether the company had already seen its most impressive period of growth, or if its still in its infancy, with much higher earnings just around the corner. If its earnings growth has already topped out, then APKT will head towards zero, after a few stubborn attempts by die-hard longs to bring it back from the dead. If instead it has more growth in its future, then this is a buying opportunity. Of course only the insiders know the true story, so the stock's performance over the next few sessions is the only insight most of us will have.
We prefer to not play "earnings roulette" in the first place with stocks in their early growth phase after they've made a huge run, because that momentum can take them to heights they don't deserve... at least not yet. You're better off with the more predictable, 800lb gorillas when it comes to earnings. A so-so report isn't likely to sink CREE by 18%.
Even better, go to Vegas. When you play earnings roulette, you're looking at 20% on the downside and only 10% on the upside. The odds in Vegas are better than that.
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