MOVI

[David Randolph]

MOVI was coming down like it was the end of the world, check the chart below:



Earnings were out yesterday, and off course, they were worst than expected. After such a collapse in the share price, it still did open gap down with huge volume. That was the exhaustion point:



Now, if you were short this stock what would you do after yesterday's candlestick on bad news? You would run to cover ! That's what I'm expecting, a short covering rally out of the gate with MOVI.

My strategy is simple: I'll buy at or near the open (33.33% of the 3 SOF Fast Portfolio, about $5,000) and will sell for a pretty fast 10% profit.

[joozt]

Hellow,

is there also an early exit strategy (on the downside)?
it looks like there is a cave in the bottom...

[la-onda]

fyi:
MOVI: Wedbush Morgan Cuts to Hold from Buy; Cuts Tgt to $7 vs $24; Analyst Notes
Friday , November 11, 2005 09:39 ET

Issuer: Movie Gallery Inc (NasdaqNM: MOVI)

Analyst Firm:  Wedbush Morgan Securities Inc.

Ratings Action: DOWNGRADE

Current Rating: Hold (from Buy)

Target Price Action: DECREASE
Target Price: $7.00 (-70.83% from $24.00)

Analyst Comments: The firm believes that mgmt needs to prove it can execute better given the negative comp results.
&

MOVI: Bear Stearns Keeps @ Underperform; Cuts Tgt to $4.5 vs $7; Analyst Notes
Friday , November 11, 2005 09:45 ET

Issuer: Movie Gallery Inc (NasdaqNM: MOVI)

Analyst Firm:  Bear Stearns Cos.

Ratings Action: REITERATION

Current Rating: Underperform

Target Price Action: DECREASE
Target Price: $4.50 (-35.71% from $7.00)

Analyst Comments: The firm is lowering their 2006 EPS decreases to 77c from 87c and includes same-store declines of 2.8%. 2007 EPS is lowered to 50c from 78c based upon slightly worse same-store declines (1.8% from 1.5%), and higher interest expense. MOVI is charting a course based upon a premise that recent industry weakness is chiefly product-related. The firm's view is otherwise. Despite the decline in MOVI stock over the past several months, they believe that the stock remains overvalued given the continued decline in the in-store rental business. With reduced revenue estimates, their price target falls to $4.50 from $7.

[lalitha0]

Hi David,

I think this is a very interesting pick! APPLAUD!

I agree with David shorts will cover soon. Look at the 3 year chart:

With my limited technical knowledge (I am working on it) I see that RSI is going up, and MACD

is going up and 50 DMA is not that far off.  Isn't this all very bullish?

Do I understand this right?

Actually I don't see why anyone wants to sell at this point, because they are all holidng at higher prices since this is continuousy falling and there isn't much downside. If I was holding this stock I would have lost a lot of money any way, no point in selling. Since now there is high volume I would wait for it to go up some before selling.

[stocky]

I am interested in knowing David's exit strategy on this one.

[Lucas Scott]

David explained his strategy in the first post:

My strategy is simple: I'll buy at or near the open (33.33% of the 3 SOF Fast Portfolio, about $5,000) and will sell for a pretty fast 10% profit.

I too think MOVI has hit bottom. Note the RSI divergence on the chart below. Also the 4x volume after the gap down on Thursday could be indicative of a reversal. I will be buying MOVI for the LukeQ portfolio tomorrow.

[David Randolph]

Hellow,

is there also an early exit strategy (on the downside)?
it looks like there is a cave in the bottom...

:-) Yes, there is, I'll provide it at the end of this post.

fyi:
MOVI: Wedbush Morgan Cuts to Hold from Buy; Cuts Tgt to $7 vs $24; Analyst Notes
Friday , November 11, 2005 09:39 ET

Issuer: Movie Gallery Inc (NasdaqNM: MOVI)

Analyst Firm: Wedbush Morgan Securities Inc.

Ratings Action: DOWNGRADE

Current Rating: Hold (from Buy)

Target Price Action: DECREASE
Target Price: $7.00 (-70.83% from $24.00)

Analyst Comments: The firm believes that mgmt needs to prove it can execute better given the negative comp results.
&

MOVI: Bear Stearns Keeps @ Underperform; Cuts Tgt to $4.5 vs $7; Analyst Notes
Friday , November 11, 2005 09:45 ET

Issuer: Movie Gallery Inc (NasdaqNM: MOVI)

Analyst Firm: Bear Stearns Cos.

Ratings Action: REITERATION

Current Rating: Underperform

Target Price Action: DECREASE
Target Price: $4.50 (-35.71% from $7.00)

Analyst Comments: The firm is lowering their 2006 EPS decreases to 77c from 87c and includes same-store declines of 2.8%. 2007 EPS is lowered to 50c from 78c based upon slightly worse same-store declines (1.8% from 1.5%), and higher interest expense. MOVI is charting a course based upon a premise that recent industry weakness is chiefly product-related. The firm's view is otherwise. Despite the decline in MOVI stock over the past several months, they believe that the stock remains overvalued given the continued decline in the in-store rental business. With reduced revenue estimates, their price target falls to $4.50 from $7.

These downgrades is what you want and should expect after such a steep decline. I think the company is way undervalued at this point. Just one quarter of revenues is 4 or 5 times the market cap. And the loss is nothing compared with the sales volume, just a bit of cost cutting and this company would be profitable again.

Hi David,

I think this is a very interesting pick! APPLAUD!

I agree with David shorts will cover soon. Look at the 3 year chart:

With my limited technical knowledge (I am working on it) I see that RSI is going up, and MACD

is going up and 50 DMA is not that far off. Isn't this all very bullish?

Do I understand this right?

Actually I don't see why anyone wants to sell at this point, because they are all holidng at higher prices since this is continuously falling and there isn't much downside. If I was holding this stock I would have lost a lot of money any way, no point in selling. Since now there is high volume I would wait for it to go up some before selling.

Well, you're partially right lalitha. People may sell all the way down to zero, regardless of winning or losing. Don't forget many people bought at $6, $7 and $8 and they want to cut losses too, as I will do if this falls to a new low or something. Concerning those indicators, they show that the pace of the decline is slowing, so maybe a short term reversal is coming, as you point out.

Thanks for your comments lalitha 

David explained his strategy in the first post:

My strategy is simple: I'll buy at or near the open (33.33% of the 3 SOF Fast Portfolio, about $5,000) and will sell for a pretty fast 10% profit.

I too think MOVI has hit bottom. Note the RSI divergence on the chart below. Also the 4x volume after the gap down on Thursday could be indicative of a reversal. I will be buying MOVI for the LukeQ portfolio tomorrow.

Good luck for the LukeQ Portfolio, you've been doing well, keep up 

I still think MOVI hit bottom on Thursday's open. I will still get out with a 10% profit if I have that chance ($7.12).

Now, thinking this is a Fast Portfolio, I need to get out if the stock doesn't perform to my expectations quickly. I wouldn't like to see it closing below the midpoint of the «make the low» candle, which was $6.03.

So, the plan is:

1) Sell with a profit at $7.12
2) Sell with a loss if the stock is set to close below $6.03.

[Lucas Scott]

I held off on adding it to the portfolio today. I still think it looks like it's bottomed, but not certain. Watching....

[Terliso]

Based on the action i'm seeing, I think MOVI has not reach the bottom yet, there is a major support down @ 3.80 to 3.90... well.. i'm closely watching it, i'll take a position if necessary 

[Terliso]

MOVI

[David Randolph]

MOVI was sold yesterday, according to plan, at $5.88, before the closing bell.

[Lucas Scott]

I held off on adding it to the portfolio today. I still think it looks like it's bottomed, but not certain. Watching....

OK, it hasn't bottomed. Run away!!

[soxguy]

maybe movi hit bottom yesterday at 4.51. time to jump in?

[akclide]

Just a thought,In a market where a lot of good buying opportunities are knocking on your door.Not a very good idea to go with a maybe it hit the bottom.

[Terliso]

maybe movi hit bottom yesterday at 4.51. time to jump in?

I hope i'm not late, .... i got busy on another stocks
I'll buy it tomorrow at open.
I try to sell around 5.90 to 6.00
Stop loss @ 4.90....