We all know what happened in the real world.....after the overnight financing was announced the PPS started falling and hasn't stopped.  From $2.05 the Thursday the deal was announced after the close to the current $1.39 at this past Friday's close. And the reaction, given the drop, is not unusual.  Lamentations about DM's ability to close a deal, cries of more dilution....disbelief and all the rest.  

But what if the price had moved the other way, the Bizzaro way....instead of dropping 66 cents or over 30%....What if the PPS had climbed after the news of the financing?  What if the PPS was sitting at $2.71 now, having climbed 66 cents?  I bet the reaction would be praise for DM for playing it smart, getting enough $$$ together to bridge the gap to a larger deal....and because the PPS would be climbing everyone would be thinking that a deal must be coming.  Those who've said they need to see some + price movement before adding would be posting about how they've been loading up.  

Its all academic....we don't live in the Bizzaro world.  But I think it illustrates the PARAMOUNT importance of Price and Price Direction and how it influences the retail herd.  If the price is moving up, then things have to be good....just look at the WorldComs, the Enrons, the Nortels....they all moved higher and the retail crowd knew it meant good things were coming.  

Or look at it the other way...keeping it to the Pharma space VRTX was trading in and around $100 in the summer of 2016....then things got ugly, it tanked all the way down to under $75 by the time 2016 was coming to an end....obviously bad things are coming, that's what the Price and Direction said for VRTX in December of 2016.  I don't know what happened to send it up around $125 currently...but its obviously a mistake.

We shall see what happens....but down doesn't always mean the future is bleak, and up doesn't always mean a pot of gold at the end of the rainbow either.  But either way Retailers will still (by and large) be bullish when they see a PPS climbing and bearish when its falling....