Today will mark the first rally attempt. Once we see confirmation, could get in the market again :)
Afternoon selling came at the expense of Countrywide Financial.
The New York Times, doing what it does best, kicked it off with a heart-manipulating expose accusing Countrywide of fabricating lending documents and burning blue collars in western Pennsylvania.
Then Lehman Bros. did what it does best… After a wicked session of dart throwing and chicken bone reading, analysts there decided to downgrade CFC stock. Their analysis suggested that Countrywide would never be able to return to former profit levels.
After that came the rumor. CFC, whispered traders, was about to declare bankruptcy. The stock got taken to the woodshed. By the end of the day, CFC stock had fallen 28%, to 5 bucks and change. Countrywide shareholders are down 80% since this summer.
“There is no substance to the rumor that Countrywide is planning to file for bankruptcy,” a spokesperson from the company shot back, “and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company.”
CFC investors should be familiar with that one… they heard it at $30 and $18 and $11. And this morning, CFC opened down another 15% right off the bell. They wouldn’t be straying too far from the script if Mozilo and his brood denied bankruptcy rumors all the way to $0.
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