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NEW YORK ( TheStreet) -- If you're a current Nokia (NOK - Get Report) investor or one of the 10,000 workers now looking for work after Nokia's latest layoff announcement, you're probably ready to smash the first Apple(AAPL) iPhone or Google (GOOG) Android phone you see.
Based on my experience with gap-downs following press releases similar to Nokia's, the odds favor Friday or Monday marking the short-term low. Even with all the money
Microsoft(MSFT) has put into Nokia, it appears to be too little too late.
Bargain hunters and short sellers covering positions could push the price up about 50% in relation to the gap-down price. Looking at the chart, I expect short-term resistance near $2.60. Round numbers often attract like a price magnet and repel, causing a bounce. Expect a lot of volume to trade near $2.40-2.50 a share today, but also be prepared for a closing under the open of $2.44, and more than a 30% chance of a close under $2.20.
If you are looking for today's drop to signal a buying opportunity, you are likely going to find the end of the day Friday better than today. There is no hurry jumping on board with Nokia.
Stocks dumping as a result of earnings misses usually take a full two good earnings quarters to recover. Take your time and do your homework before allocating capital here. Look for the second break above $2.50 as the one that "sticks." (Read my
Will Apple's Shot at Google Hit RIM and Nokia Instead?)
Want to see a classic miss earnings result a few weeks after the fact? Take a look at
Pandora(P). Pandora disappointed and traded from $14 down to an intraday low under $8. Also, take close note of the next few days after earnings. This is a classic pattern I see often, and you can, too. Simply use your software to look at charts from the past few quarters and review the ones that gapped down the next day. The high placed a couple of days after the gap down in Pandora is now resistance.
A more recent earnings gap down is
DELL(DELL). Dell disappointed and traded from $15 down to an intraday low of $12.31. Also, take close note of the next few days after earnings. This is a classic pattern I see often, and you can too. Simply use your software to look at charts from the past few quarters and review the ones that gapped down the next day. The high placed a couple of days after the gap down in Dell is now resistance.