I don't get it, and I may never get it!

. Yesterday I wrote about the trials and tribulations of being short in the market. I was looking forward with some apprehension to QLTI's earnings report today, and how that would affect my short position.

When I looked in on the markets 15 minutes before the open, QLTI had reported and, to my way of thinking, the headlines weren't all that good: revenues down 20%; earnings per share half what they were a year ago; sales projected lower than previous guidance. One positive note: the company would buy back about 15% of its outstanding stock.

QLTI news

Surely the market would not be pleased. Surely Trader Paul would be pleased.

QLTI queue at market open (9:30am ET)

However, when I looked at how the session was shaping up, I was shocked to find QLTI trading before the open up more than 8%! And the bids and asks lined up in the queue took my breath away.

QLTI early sales
QLTI: list of last sales.

And when the market opened, some of the first trades were in big lots, two of them more than 15K shares each.

"What the hell is going on?" I wanted to know, incredulous. The market is often a bit exhuberant at the open (personally, I think it's brokers trying to goose the market), but this was ridiculous. Throughout the day, QLTI traded mostly just below $7.10, coincidentally the price that Market Edge had identified as resistance.

QLTI 1-day chart QLTI 1-day chart, 5-minute intervals

In hindsight, the only thing I can figure out is that news of the stock buy-back overshadowed all the bad news in the financials. Looking at this positively, QLTI closed just above the resistance line, having retreated significantly after the open. Could this be an exhaustion rally? Will enthusiasm wear off after traders have had a chance to sleep on it?


Meanwhile, Blockbuster Video also posted its earnings report, and the news seemed pretty good. BBI reported record revenues and turned to profit compared to a loss a year ago. The market will probably like this.

Wrong! The market busted Blockbuster's chops, sending it down almost 12% on the day on three-times normal volume.

BBI 3-month chart

After the market today, two more of my holdings posted earnings, NANX and RNWK. I'm afraid to face the market tomorrow!