Friday, May 14, 2010

HAUP fizzles on earnings report

Rough week overall for the market, even as it finished net positive. For me, there were missed opportunities, like HAUP, which had bored day traders in a tizzy starting late Thursday afternoon.


Hauppauge Digital (HAUP 3.93 +0.90 +29.70% — 3.72 after hours) is what it is. All the rancor and fuss about the service it provides for the iPad is entertaining, to say the least. Bottom line, though, is that Hauppauge was certainly worth more than 92¢ per share yesterday. Is HAUP worth 4.85? That was the high today in crazy momentum movement.


The run is done, barring something unforseen from a company that knows its niche and played its sparkly iPad announcement (Thursday) and underwhelming earnings report (today) expertly — great for momo traders early, bad for momo traders late.


Maybe this is a jump-the-shark moment, proving the bears' point that the bull run is done. When tiny stocks gain 300-400% on one press release without earning that shiny new market cap first, well, they've got a point. But HAUP is no 92¢ pennie and won't be again, not in the near future.


Being in the middle of the Pacific and working a regular job has me at a disadvantage occasionally, so I missed the premarket and early-morning run. That's the nature of my situation and I accept it. Don't like it, but it's reality. I wanted to see HAUP return to Fibonacci levels starting at 3.38 for a possible entry. With Haupaugge's earnings report after the bell today — not very positive — Monday could be a tough session for momo traders who entered the stock above 3.50.


I learned long ago that you don't want to hold a tiny-cap momo play long. In fact, the lifespan of a position in that kind of vehicle is better measured in minutes, even seconds, than hours and days. Fortunately for new longs, HAUP is going to make money and in three months, the next earnings report will be much better than the one released today. By then, however, the majority of momo traders will be gone, and HAUP will likely drift in a range much lower.


By then, I might get some shares. I missed the first boat out yesterday, and then missed the second one today. With HAUP down to 3.72 after hours and clearly no new press releases coming until the next earnings report, it would still be a triple-bagger at 3.00 or so.


You know, with just 8 million shares in its float, maybe I'm wrong and HAUP will roar up and down for days to come. Shares, apparently, are tough to find for shorters. This might be better than watching poker on TV.

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