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Tellabs...technical. Tellabs had a double top at $74 in July. They reported great earnings, but the stock dropped about $5 points on 2X normal volume on the announcement. Not a good sign. It bottomed recently at $55 and the subsequent rally brought it up to app. $67 yesterday. Today it dropped around $5 on three times normal volume. The fundamental excuse was Ciscos acquisition that might muscle in on TLAB. Leaving the fundamental excuses aside, the technical action is bearish IMO. Stochastic has turned down also. Not good if breaks $60, and worse if it breaks $55. Fundamentally, earnings should keep coming through in fine fashion in the near future, [which MAY limit downside], but these new seeds of doubt may keep a lid on TLABs price for some time at best. This is a time where I will go back partially on what I said RE. SFEs TLAB sales in a recent post. I disagreed with those sales a year ago, but from the technical picture, I hope they have been selling some TLAB the past 6 weeks. For long term holders with the very low [Coherent] cost basis, possibly covered calls could be considered if one believes in Tellabs long term and wants to preserve the low cost basis.. I've done it 2 of the last 3 mo., and just missed a sale on the close today. Will probably try again tomorrow, with every intention of buying back before expiration if this analysis is incorrect. Not intended as specific advice, but just a technical alert. Thanks, Mike |
