It is really a good feeling when released good news about a company exceeding its financial benchmarks are rushing its shares up.
Being an excellent example, Infinera Corp. (NASDAQ:INFN) stock surged 30.76% in a day.
Though, after the hot investors’ enthusiasm and the explosion, as traders say, the healthy market has to be correct from time to time.
On Thursday, INFN announced its financial results for the second quarter ended June 26, 2010. The recordable revenue increase, the 42% GAAP gross margins for the quarter and the evidenced market share gain in a rapidly growing industry uncorked INFN stock boom.
At the end of the week, INFN shares were worth $9.14, which was 42.15% more than a week ago.
Despite analysts’ recommendation upgrade for INFN stock from “Market Perform” to “Market Outperform”, this Friday the RSI index sharply scaled 75.80. This may be a signal that in short INFN stock may become overestimated.[BANNER]
The eight times the average volume traded also reminds that after the hot bids and the explosion, the time of the market saturation comes.
The mid and long term bullish mood of investors towards INFN stock is understandable. At the same time, investors should be warned, that on the short term, the shares explosion is sometimes followed by a red price reversal, if not by more than 10 % correction.
