ENE is now HIGH risk... the big money has been made swinging the short from the initiation of the regulatory difficulties. Given DYNs rejection of ENE, ENE becomes a prime candidate for Chapter 11. I wouldn't touch it, given yesterday's DYN rejection.
ENE should have some interesting action today since they're getting booted from the S&P500. The index funds have to exit their positions at the end of the day (Thur Nov 29th) so its less likely (I'm guessing) to be halted today. Their business it kaput and there is no way to pay all the notes accelerated by their debt dowgrades so bankruptcy is a certainty. Common shareholders will be left with stock certificates only. Don't mistake massive short covering with new buyers. This puppy hit $10+ about 2 weeks ago and was > $35 as recently as mid September. I'm sure some big money that's knowledgeable about ENE's business situation has been riding this thing down and may be covering though it may not even be necessary. A friend of mine who works for PCG (PG&E) told me weeks ago that they had had been wary of Enron for some time and limited their trading with them so it was (I think) fairly widely known that their core business had deteriorated. I need to talk to that friend a bit more often!
Being a short term player, me and praetorian2(HK in the room) traded ENE, I got a small quick profit and will certainly watch it today, remember, before it goes chp. 11, once the shorts cover, that will trigger the upside, so I see 50% bounce is very doable in 2 days. Read the tape (L2+T&S) to decide the entry, throw 5k as the probe, add when you right, unload before you wrong, tighten your stop and use isld... Oops, too much TRADE secrets hehe Good Luck
I just heard on CNBC that many traders at Enron make $10 million a year. How is that possible? How exactly do they trade? is it anything like trading financial or energy futures?
Enron breaks down the risk components (production, transport, storage, etc.). of the commodities that they sell. They are a producer and market maker in one, hence giving them a huge advantage. There is also a lot of financial leverage that happens in the background, where they have production advantage via economics of size. This is covers the basic but doesn't talk about the component risk elements nor the financial leverage: <A HREF="http://www.zdnet.com/ecommerce/stories/main/0,10475,2799242-2,00.html" target="_blank">http://www.zdnet.com/ecommerce/stories/main/0,10475,2799242-2,00.html</A> From the (preliminary) looks of things, it looks like another classic case of overleverage. Your risk model says you're totally hedge but one wrong assumption in your model and it comes crashing down on you with all that leverage. I see LTCM written all over this, except no government bailout this time.
as a short term play I'm waiting for it. IT MUST GO ABOVE PREVIOUS CLOSING PRICE TO GET LONG. Don't hold overnight. Rtharp
Would you still enter if it gaps up in the morning? And if so, where would you put your stop? I would think if it gaps up, then it will sell off pretty quick...
I am holding 10k - .36 overnight now (just for fun) and if it gaps up, I will dump them right before the open. I missed intraday bounce though - was busy shorting ACAM... Good Luck