On Friday, Feb. 14, Cray Inc. CRAY experienced a meteoric rise of about 39%. Smart money took advantage of the strength and sold aggressively.

Cray is in the business of super computers or high-performance computing (HPC).

Let us start with a chart. As the chart shows, the stock closed at $41.66 up 11.69% on volume of 4.82 million compared to the average volume over the past three months of 451,000. The stock market is supposed to be a discounting mechanism, in other words, at least old news is expected to be discounted in the price. In the case of Cray, the stock exploded on old news.

Please click here the annotated chart of Cray.

As the chart shows, back in January, Cray stock skyrocketed on the news that the company was projecting fiscal 2014 revenue of about $600 million. Interestingly, Cray’s view was not much higher than the consensus view of $596 million fiscal 2014 consensus review. The explanation of the January jump was that some investors had doubts about Cray meeting its fiscal 2014 revenue estimates.

On Feb. 14, the market became euphoric again when Cray projected fiscal 2014 revenues of about $600 million. The market’s interpretation of the conference call added fuel to the fire. On the call there was discussion about IBM’s recent announcement to sell its X86 Server to Lenovo. Peter Ungaro, CEO of Cray, stated that this was a big deal for the entire HPC market. Ungaro was right but this was already well known. There had been talk persisting since May 2013 that IBM was going to sell its X86 to Lenovo….Read more at MarketWatch