What happened to Fiusion-ip (FIO) today? Here’s how you can trade it tomorrow?
Discussed in this article: Fusion-io ( $FIO )
I want to look at Fusion-IO ( NYSE:FIO ). Why is this thing up so much like nothing happened? Well here’s what happened; it was announced that Western Digital ( NASDAQ:WDC ) is buying Virident, which is a flash memory maker. And guess who the big competitor of Virident is?
Well, that would be FIO ( NYSE:FIO ). Guess who the big competitor of Western Digital ( NASDAQ:WDC ) is? STX, Seagate Technologies ( NASDAQ:STX ). There a couple analysts that upgraded FIO ( NYSE:FIO ) on this idea that since Virident is being bought by Western Digital ( NASDAQ:WDC ), guess what Seagate Tech ( NASDAQ:STX ) is probably going to do? It’s probably going to make an offer to buy Fusion-IO ( NYSE:FIO ).
Now the problem for Seagate ( NASDAQ:STX ) is, they’re not going to really be able, with the stock at 13.60, if they do decide to buy it; they’re not going to be able to buy it for $12.00. So this high price puts them, let’s just say, not in such a great spot.
But here’s the deal, if this stock trades above the intraday high here of 13.77, you can see it closed very, very close to the high; as a short term trade, who knows what’s going to happen? I could stand here like a fool and say, “Sure, they’re going to them, or, No they’re not.” I have no idea, nor do most people. But it seems like the logical thing.
So here’s what you do; you look at the top here of 13.77, you slide yourself into a five-minute chart, and if this stock, that’s if, not when, if the stock starts trading above 13.77, then you go ahead and treat this as a day trade. If it breaks out to a new high, just know that you’re dealing with the three day rule here, where the real smart guys buy the stock on the first day, the semi-smart guys buy the stock on the second day, that’s tomorrow, then after that the scraps are left for whoever’s left behind.
So you want to just understand that after a big move like this, like a 25 percent move, how much more is this stock going to go before the buying peters out? I mean that’s a big, big rise in the stock in a single day, on speculation that the company’s going to be bought. Speculation makes sense to me, that idea makes sense to me, but its also making sense to a lot of other people. At some point that’s going to be factored in.
So again, if your trading this thing make sure you’re doing it as more of a day trade, kind of a quick flip type of thing. And if the stock doesn’t trade above that level then you go ahead and get out of this stock if your are already into it; just make sure you use tight stops.