I am getting steadily more bullish on NTAP every week. The chart is looking very strong, reinforcing that a major re-evaluation of the stock is going on:
1. Today, we took out the August highs. This breaks the pattern of lower highs that held since October 2000. Up till now, in this entire downturn, 3 months after a previous intermediate high, we were setting new lows.
2. That retest of the 50DMA, from above, was an accurate signal.
3. The only resistance I see, above us, is the 200DMA, which is just above the May highs, at about 30.
4. a lot of stocks I'm following, bounced hard off the late-September lows, but have recently stalled. QCOM at 50-53, TXN at 28-32. Others are just now reaching what looks to be strong resistance, and it remains to be seen whether they can push above them. AMAT at 40, for instance. But NTAP keeps on going higher, breaking easily through what I thought would be resistance levels. This is not just a technical rebound off oversold conditions. This is a re-evaluation of the company and stock. And it is specific to NTAP, not the overall sector (compare NTAP and EMC charts). I'd bet there are 100+ mutual fund managers and analysts, right now, looking at NTAP and thinking seriously about buying and raising estimates.
The valuation worries me, at these levels, but I am not going to sell yet. We're in a buying frenzy, and I might as well go along for the (very profitable) ride.
Caveat: although I see nothing but blue sky above us, I see the same thing below us. If we go down, it'll happen as fast and far as we've gone up recently. Buying at these levels, would have to be labelled a GreaterFool buy, based on the hope that an overvalued stock will see more momentum money piling in, to drive it to even more overvalued levels. I wouldn't even consider adding more, unless we hit the 50DMA.
Thanks for those analyst comments. Expectations have been lowered enough, when beating expectations of 0.00$ is called "a strong earnings call". CY02 estimates of $862.5M/$0.08 is a low bar to jump over.
I wonder who they consider to be NTAP's peers? EMC? Growth twice as fast as EMC?
JS@thegringetsbigger.com |
