CANEXUS CORP 6.5 PCT DEBS T.CUS.DB.D

RE:RE:RE:disproportional reaction

[pm1231]

Thanks for your response.  I'm still curious how you got to $4 based on chart/volume patterns...what is your time frame (ie. next few days, months, year end?)

a) Set aside that any news this week will render technical analysis moot (either guidance will be positive or negative which will move the SP) - but setting fundamentals aside for arguments sake and focusing on technicals....

b) Today we broke resistance at $5.00 per share - but level II/market depth suggests a 5 to 1 ratio of buyers to sellers with strong support at $4.90...

c) Based on technicals - we may see the beginnings of a double bottom formation at $4.80 if resistance holds - volumes (albeit high) are decreasing from 4.4M to 1.5M to 1.4M today....nothing in the volume patterns to suggest sellers will start dumping shares at these levels to $4.00 given the downward trend in volumes - am I missing something?

2)  I do agree - firing the CEO creates uncertainty - and the market hates uncertainty to the tune of 17% drop since the CEO announcement.   And thats exactly what happened so the uncertainty is priced in at current levels.    Per my earlier post - because he didn't inform the board of a 40% cost overrun on NATO is just as plausible as potentially more bad news which seems to be supported by TD research.   I go back to what the bad news can be as previously outlined - and there are definately potential pitfalls for more downside.....but how much lower we can go at these levels is the million dollar question....given the growth profile for NATO and the consistent cashflows related to their chemicals business - would gladly purchase more shares at $4.00....

3) On this final point about the dividend (since I have beat this to a pulp in previous posts) - the BOD sets dividend policy - not the CEO.  Second,  cutting the dividend is usually a measure of last resort since a) the BOD is keenly aware what will happen to the SP should they make the cut b) they have to determine how to redeploy the capital to generate a return in lieu of lost market cap and make the case to shareholders why it was the best route to pursue and c)  a consistent dividend track record/history is something most boards aspire to.

If future cashflow is sound - then the BOD will likely absorb dividend payments to avoid cutting the dividend even if dividend + capex exceeds 100% in the short term...and I suspect shoring up liquidity to manage cash balances was one driver for the $150M bought deal

Anyway - we will know one way or another later this week.....place your bets one way or another - but for those reading these posts - do the analysis and come up with your own conclusions - lots of noise out there.