- Dex Media (DXM) has fallen 11 of the last 12 trading days (18% decline). The decline is not driven by fundamentals as the bank debt has traded very well.
- We see the weakness driven by: (1) reaction to Kyle Bass sales; (2) short interest surging; (3) possible August option conversion (see below).
- The daily RSI at 33 was only at this level 3 times. 3 of 3 times, stock gained an average of 75% within 3 months.
- The daily MACD histograms are about to reverse from oversold conditions. This only happened 2X previously. Each time, stock gained over 100%.
- Bottom line, we believe investors should take advantage of this oversold condition and acquire shares.