As for DIVX, we have to admit out loud why this stock saw so much action last year. Plain and simple Jim Cramer. I used to go out with a woman who was VP at some clothing company down by the Empire State Building. She found new ideas for clothing by going into stores and copying someone else's idea.
Traders are very much the same way. They are lazy creatures that do not like to work. They got into trading in the first place so they could avoid a real job where they actually have to move and speak. Traders dont like to do their own research and its so much easier just to switch on the tube and see Jim Cramer name the stocks to trade.
So they all got on board DIVX. The other thing about traders is that they do not like to find other stocks to trade. They usually stick around the same stock because they are too lazy to find new ones.
All of the old traders are still there looking at DIVX and watching it. They will be ready to get back in at a moments notice. As well, I bet there are still plenty of traders shorting the stock from the time Cramer said go.
Back in January, the chart was very similiar to the way it is right now. That resulted in a breakdown.
However, my gut feeling tells me that there will be a pop. There is the concept of distribution and then there is the concept of accumulation. I believe accumulation is in process and there will be news soon that will pop the stock.
Im not 100% on this though, but I believe its a 75% chance. The other 25% is a breakdown to the single digits.
