Shares of insurance software vendor Ebix (Nasdaq: EBIX ) were minding their own business on a humdrum day, until all hell broke loose and the stock fell more than 26% on truly massive trading volume in the early afternoon. So what: This stock suffered an entirely inexplicable fall a couple of weeks ago, but this time there's a real driver behind the action. A scathing three-part article that eviscerates Ebix for being overpriced and possibly fraudulent hit the news feed just as the panic-selling started, showing that investors were taking that message to heart.
People invested in Ebix are panicked. This is PRIME TIME to short. Normally I would watch to see if a stock like this settles in..but, after hours we got the news of an investigation being launched...this should only add gasoline to the fire.
I love the fact that the stock is WAY UP from its lows this year (400%) meaning a lot of people will decide to take their gains while they can adding to the selling.
Action: Short as many shares as you can get in the mid 22's and use 10% trailing stops in case some major short suddenly covers or they release good news to curb the bleeding. I think we could see another 10-20% tomorrow.
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