First off you shouldn't have sold. <g> Secondly you should have put the money into JDSU.
I agree with the first part of that statement as the damage to GNET should just about be done with.
However, putting your money into JDSU, no matter how outstanding that company's technology or future is, is a sucker's bet right now. I know... my wife is holding it and I'm telling her to sell it now and buy it back later for less money.
siliconinvestor.com
If you note that daily stochastic and MACD, JDSU is way overbought and the stochastics are rolling over. The MACD going lower confirms JDSU is a short to intermediate term sell.
Looking at GNET, the downside risk from here is probably $75/share, although Stochastics are also rolling over bit not from so high a level (and thus should bottom out sooner).
Now one difference also that should be noted. JDSU makes fine products, but they are having problems meeting demand (hence the buyout of ETEK for $15 Billion or 25% of JDSU's current market cap). They face capitalization costs in ramping up manufacturing and that is interest rate intensive.
GNET, on the other hand, may actually profit from higher interest rates on the cash they have deposited and since they don't to borrow money, interest rate hikes really impact them directly. They make acquisitions that are almost immediately accretive to earnings, are already profitable, and they have more cash per share than JDSU.
biz.yahoo.com
biz.yahoo.com
But what is most important of all, the investing "herd" has not all stampeded into the stock, ready to stampede out at the first sign of a market correction, quite unlike the situation with JDSU where everyone and his momma owns it. (Look at the institutional ownership of the two stocks)
If people want to impact how this stock trades, get your shares off of margin. Unmargined stock can't (legally) be shorted. More extreme is take delivery and put them in a bank vault safety deposit box.
Or more appropriately, read the technical signs and trade this puppy. Sell high, buy low and create the kind of trading volume that brings the "big boys" out to play in a liquid market.
Regards,
Ron |
