Beware of the 'Best Play' trap, page-2

Some very good points/observations.

I note this forum has yet to discuss how the SP can disconnect so much from what should have been a reasonable correction in the value of the company.

The go slow from GLE seems appropriate. No point using contractors to do more than you can do with your normal staff levels and then have to mothball the work until market conditions (i.e. commercial viability) returns.

CFDs, Margin Loans, Short Trading, etc. and their impact on stocks in situations like SLX can be significant.

In the link below, SLX gets a mention as a great past/future short trade.

https://www.tradinglounge.com.au/Se...urrent/TechnicalAnalysisReportWeekly9July2014

The downward SP trend was halted in the days leading up to the recent announcement. A potential bottom was formed. The article in the Fairfax papers (SMH, AGE, AFR), I think, was actually trying to cash in on the expectation of positive news coming out of the trading halt. The articles were a re-hash of previous articles, just refreshed for the recent SP falls and the recent focus on SILEX technology. I think they were hoping for "we told you so".

When SLX released the GLE announcement, I tried to trade the expected downward SP movement. Comsec would not accept seemingly market price levels prior to open, so I didn't bother. I'm not sure of the reason for this, but it may have been an indication that pre-trade SP levels in their system had already changed.

Anyone who wanted to get out quickly would have to accept a low price. I believe margin loans need to be settled next business day, so if they were to be settled with SLX sales, then you would have to accept open or hope the price recovered throughout the day.

I'm not sure how all the other exotic market instruments work, but no doubt there were a lot of other things happing on the day. A 40% plus correction, coming off recent large falls would clear out any risk adverse investor/trader.

It will be interesting to watch what happens over the next days/weeks. If the capitulation point has been reached, the shorters may give up and the SP would drift higher. The shorters may give up, but traders might stay around and play some volatility. I don't know.

For long termers:
SLX have committed to SILEX commercialisation and will reduce their cash burn to ensure their multi million $ cash reserves last the long distance to royalty revenue. It is a binary bet. The GLE announcement didn't change anything on that bet. In fact it ensures GLE can stay in the game.