I sit at the computer this evening on the heels of the resignation of $AMD‘s CEO. This was a trade I made last week on a combination of fundamentals and a bullish chart. It had everything going for it and was working its way up a steady trend line, just about the way I thought it would. Some of you followed me into this trade and while I don’t think all is lost, we have certainly lost some serious ground.
After a dual upgrade by Nomura and Morgan Stanley, the stock was up over 4% on the day to a close of $9.19. Nomura upgraded to Buy from Neutral and Morgan Stanley went to Equalweight from Overweight. A positive rating also came from Gleacher who reiterated its “Buy” with a $12 price target.
Then, unexpectedly, the CEO resigns. Argh! Suddenly the headline reads, “Goldman Sachs price target on $AMD $5”. Really?? Of course, the stock initially lost all it’s gains for the day. But in a new twist of fate, $AMD comes out after hours and says they expect revenue above guidance. So what do we know from all this? Nothing. We have no way of knowing why the CEO resigned any more than we could have predicted that it would happen.
This is something we have to be willing to accept as traders. No matter how proficient our due diligence, we cannot legally know the inner workings of a company if they do not tell us. Perhaps the CEO has an issue that has nothing to do with the performance of the company. No explanation has been given as yet, so we can only surmise. I am somewhat comforted by the fact the CFO was named the interim CEO. After all, who better to guide the company’s financials? If the CFO is willing to take over, he must have some confidence in the numbers.
Tomorrow I will watch diligently for price action. I do not know if I will sell it pre-market or give it a chance to explain itself as I will have to make that decision when the time comes. Since I pride myself on being nimble, I will be ready for either outcome.
I will post my decisions as I make them in both The PPT and 12631 for the benefit of those of you who may be interested.
See you tomorrow in the great soap opera that is Mr. Market and his minions.
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Thanks @thewife. Will be interesting to watch the price action next few days.
Great Post…no matter how diligent we are with our trades, we are reminded, everything can turn suddenly
Excellent blog! Trading is certainly a “roller coaster ride”, many ups and downs and unexpected turns. @Wife, you are another hard worker that will be rewarded from your efforts!
Thank you all for your comments and support. Note that I sold first thing this morning for a profit, albeit small. It went much lower so I am happy. I will continue to watch this to see where it goes.
Sorry to hear that… Reminds me of me on the morning of Apr 8, 2010, dreading the opening of Shoppers Drug Mart ( http://www.google.ca/finance?q=TSE:SC ) after our glorious premier announced a drug pricing reform plan which killed Shoppers’ primary revenue stream…
But good to see the situation was handled with professionalism and generated praise in the 13621 videos!
I just keep telling myself, there’ll be plenty of other opportunities, but I know, it doesn’t make the mood any more pleasant at the moment it happens…
Thanks omen.