A Tale of Two Stocks: How the Bears, Bulls got Caught Short and Long on Nokia (NOK), Zynga (ZNGA)

The 44 percent surge in Nokia Corporation’s (ADR)(NYSE:NOK) share prices last week has brought into focus a tendency of the market to sound a premature death knell for companies.

For more than a year now Nokia has been at the receiving end of the Street and tech analysts who have all but buried the company for not being able to keep up with Apple and Samsung in the smartphone segment.

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But there is no doubt that the company has been quietly working on the side-lines as testified to by its quarterly sales volumes and the sudden spike in its share price. Somebody somewhere knows something that the vast majority doesn’t.

In the quarter to June, the Finnish handset maker sold about 4 million units of its Lumia phones, beating analyst expectations by about a million. Overall its phone sales volume rose by 4 percent from the previous sequential quarter, again belying market forecasts of a 4 percent decline.

In the era of smartphones, smarter tablets and applications that are touted to do everything for you - except maybe cook your breakfast - Nokia is still churning out feature phones, a category that has been identified as endangered.

However the fact that the phones are moving off the shelves is proof that the market is not yet ready to order the coffin. It looks like the smartphone explosion may be over-exaggerated and the death of the feature phone a hasty conclusion.

Has NOK Found The Bottom And The Stock Continues to Rally?

Analysts tracking the stock have realised that Nokia's cash position is actually healthier than they thought. A part of the rise in its shares is, of course, to be attributable to bears covering their short positions, as they had anticipated a further fall in its share price. The rise in shares caught them by surprise.

Those, who did not want their dire predictions to be seen as so much hot air, then invented the takeover rumour - on Wednesday the buzz was about Lenovo making a bid for the phone company - to justify the rise in its prices.

It was the reverse in the case of game developer Zynga Inc(NASDAQ:ZNGA). When it bought OMGPOP for $200 million in March, analysts scrambled to up its stock rating with fantastic price targets.

Can ZNGA Rebound After Recent Slump? Get Free Trend Analysis

Sadly, "Draw Something" the game from OMGPOP's portfolio failed to set the game market on fire while Facebook's numerous and constant tweaks to its site algorithms made sure that players were unable to find Zynga' existing games. Monotony had also set in with Zynga's repetitive game mechanics on the social network.

The results are there for everyone to see. Zynga's share prices have lost half their value since mid-July to as low as $3 a share.