Well, that escalated quickly. Rumor has it that Zillow and Trulia are in merger talks. There is no proof of that, but CNBC was apparently pumping it all afternoon and an immense short covering rally took hold. I had gotten the alert that Z hit its 20MA, the baby blue line, and the next thing I knew the sucker was at $150. I sold out all eight of my shares at 151.67 after buying them Monday at 125.23, making a $211 profit. I'll take that! What luck!
As to what I think about the rumor... it's a rumor. And it doesn't look like many people believe it. In fact, the Z chart looks very similar to what happened to the 3D printing stocks (DDD SSYS XONE) a couple weeks ago:
Some news came out that day of the huge wicked candlestick that Home Depot was going to start selling 3D printers in stores... or something, can't remember off the top of my head. The reason both stocks rocketed was because they have high short interest - people think they're valuations are stretched, to put it lightly. So while it shot up initially, people started shorting and selling again once the "news" set in and things calmed down. DDD SSYS and XONE all sold off considerably in the following weeks.
Do I think Z shares the same fate? No. Z has been in a strong uptrend while the 3D printers have all been in a downtrend and have reversed 40-60% off their highs. But I definitely would not trade Z at these levels, it's too risky: if there really is a merger going through, Z will hit $200. If not, Z will sell back down to pre-rumor levels, $120 ish. I'd rather observe what plays out from the side lines.
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