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Herbalife (HLF -5.8%) reverses an early bounce following yesterday's plummet. It's a broken...
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Wednesday, May 2, 2012, 2:49 PM ETHerbalife (HLF -5.8%) reverses an early bounce following yesterday's plummet. It's a broken momentum play, suggests Michael Davey, ignoring for a minute the Einhorn story, and just looking at the chart. He compares it to CROX, which years ago made an all-time high, gapped down the next day, and just kept sinking.
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30 million shares were supposedly sold (and bought yesterday) and another 22 million today. vs. less than 2 million average. We will not know for some days how many were actually really transacted.
The shorters playbook is in use here. 1. Create doubt and confusion, 2. Seed some big selling (stop losses will add ten times to your seed,) 3. Watch and see what happens, 4. When the panic selling subsides launch your main attack (case against the company.) 5. Watch and keep plugging until price objective achieved or until the price won't go down and you have to cover.
Duck for cover, the main attack is yet to come, and we've seen the impact of the initial salvo.
Disclosure: Long HLF