Rob, The 50 day m/a is down at $5 1/4, so CMPC could pull back even more. It acts great, breaking out on very high volume and pulling back on low volume. Most of the time these type of stocks that are not in the public eye have a run [on a news item], then pull back providing a good entry point. I would caution that CMPC still has not proved that it is turning the corner. Would be comforting to see a solid earning quarter. I know price precedes fundamentals [and recent action indicates that positive fundamentals should be forthcoming], but still-one should be cognizant of extra risk here because they have not provided tangible evidence yet.
I view SFE like a runner that just sprinted part way up a very steep hill. Going sideways catching its breath before sprinting up again. As mentioned previously [somewhere?], I'd still bet that this years highs will be made between last Friday and late April-May at the latest. Just a lot of precedence for that in recent years. I wouldn't trust NASDAQ or most high flyers for more than another month or so max. Money flows currently are enormous-as in $9Billion on Wed. alone!!! That ought to change after mid April.
Also of note, many value stocks got really cheap and put in a bottom two weeks ago. They have been acting quite well ever since. In my opinion, many had their bear market and I'm not to worried about them. The valuation of high flyers can be rationalized but I think it will turn out-not justified at current levels- lot of disasters in the making. One of these days they will drop like they did a few days ago but won't come back. In fact, I think many have already put in their yearly highs. It appears the recent drastic drop in secondary high flyers has scared quite a few into going with the blue chip growth/tech names like CSCO, SUNW, INTC, MSFT, and even GE. "Safe" blue chip tech names. This will be and is the next area of wild excess and represents undue risk just because of the overvaluation. With their size and market caps, few will be able to [grow enough] to support valuations now being given-they could go higher in the mania for them, but instead of validating their safety and appeal, it will only make the situation more dangerous. I'll take 12% growth with a 6 or 7 PE [and low expectations] over 30% growth and 150 PE [and expectations so high there is no room for error]. Just so much money going in currently, the easy and liquid thing [for a fund manager with a mound of new cash on his/her desk every morning] is to pour it into CSCO, MSFT, INTC, etc. Dangerous in mid to longer term because it's not respecting tried and true valuation measures that have worked for 50X longer than this current tech mania. Valuation does matter-it just means nothing in the short run. People are acting like it won't matter in the long run either. Big mistake IMO. Mike |
