Mike,
FDC is approximately 85% owned by institutions, the single biggest concern I have with it. There's no telling when one of them like Putman decides to dump it. Technically, the stock broke its 4 1/2 year uptrend the beginning of December & has been floundering & trading in the 34-39 range ever since. I suspect the technical breakdown is the primary reason for Putman & others to a far lesser extent to sell it. I believe at these prices you will find fewer institutions willing to sell & others that haven't gotten in looking at it. Technically, it is still very weak; just about all short term indicators negative. Short term indicators such as stochastics, RSI show it very oversold & ready for a rally. Short term oversold indicators however are not always reliable in a downtrending stock; they are much more reliable during an uptrend.
I find reading charts the most reliable means of finding support/resistance in down trending stocks. Currently if you draw trendlines at the top & bottom of the cycles it has been trading in (5th cycle in a 34-39 range-lower highs & lower lows) since December, the stock should hold above 32 3/4 this time. It needs to decisively break back above 39 to turn the long term technicals positive.
This is the only stock I know fundamentally & maintain a long term position in. I realize it is dangerous to be so certain about a stock but I feel that with 99.9% certainty, FDC will be a geat long term holding. Because of my confidence, I use a separate trading money management strategy while it remains weak. What I do is place open orders to buy it each point it drops & when the buy is triggered, I place a corresponding order to sell those shares 2 points higher. I have had standing open buy orders from 36 3/4, 35 3/4, etc. to 30 3/4. when I pick it up as I did Thurs. at 34 3/4, I immediately place a sell at 36 3/4. If it drops to 33 3/4 tomorrow, I get more & place a sell on those at 35 3/4. Obviously I am in the hole now during this down cycle as I was during the other four down cycles but when it goes back up I do very well. It is a littly scary during these drops but with the confidence I have with it, I'm not worried. The bottom line is that I am using a strategy I feel works for a great company during these torcherous down cycles. I change strategies when the stock starts a new long term uptrend.
Well, I've babbled on enough.
AE |
