RE: Should have sold
I was thinking that when it crossed over $10 a few weeks ago when it completed the rally from the last drop in November. The technicals said it was oversold then and I said it would come back. It did.
What is going to happen now? We have a couple of twists in the scenario now. Management has cut the dividend, which appears to be leading to an exodus of dividend investors. Coming in at this point are value investors, who are looking at the technicals and even with the reduced dividend, it is still a nice 7% yield. Throw in management's decision to adopt a poison pill provision and a share buyback, you have a couple of forces at work against each other. Which side is going to win out here?
Technicals are indicating oversold at this point. The RSI is at 17 and the MACD is a negative divergence in relation to the 9 day moving average. The bollinger bands indicate oversold at this point. All three indicators are telling us there should be a rebound in the price at some point, so in the short term I think there could be a bounceback.
Longer term, it gets a little murkier. I am not a fan of poison pills as that seems to be more about protecting management from a takeover than getting shareholder value. That could put a damper on the stock. It will be interesting to see what future earnings reports look like in the quarters ahead.
Steam