This may fall in the "any fool can figure" category, but you asked for speculation on FFIV's recent price action, so I'll give you mine.
First, remember that the stock recently double bottomed off @30 and moved to 50. It is allowed a 50% retracement to 40 or even a Fibonnacci retracement to @37 3/4 without seriously damaging the uptrend. In fact, successful retracements can be healthy, long term.
Second, this is a skittish market and the Barron's article on e-commerce companies certainly created an environment of "wait and see" regarding FFIV's earnings, quarter ending June. Now I'm sure you understand that FFIV is profitable, is into infrastructure, not retail sales. But FFIV's products are not the easiest to understand and some doubtlessly reason that if e-commerce companies are having difficulty, there will be less orders for support products. Others have pointed out that FFIV's sales are connected to the growth of the internet in general and not dependent upon the dot.coms, but a lot of investment is far from informed--just read the reasons, both pro and con, on a message board like Yahoo's.
Third, the Stochastics that I observe could turn positive for FFIV any day now, but would support a more sustained advance with another day or two down or sideways.
Fourth, F-5 is a serious threat to Alteon, and Cisco/Arrowpoint in F-5's area of internet traffic and content management. Look at the recently posted White Paper at F-5's website and you can see that F-5 has the potential to blow its competitors out of the water. Now Cisco is the 60-ton gorilla and the stock where many circled the wagons in the market's recent pullback. Cisco's deep-pocket investors may be shorting F-5 (in my opinion) to conceal the fact that the Arrowpoint purchase was an act of desperation and fiscal absurdity. One way or another, F-5 is going to dominate its market because its approach is better. Profit is profit and F-5 is continuing to pump it out. The fourth quarter, when revenues start coming in from Dell, is when growth rates will return to levels irresistable to a larger pool of investors. The shorts, probably already beginning to cover, will be caught at the exits and the stock will spike. Besides, Cisco has recovered enough from 50 so that it doesn't need so much protection. |
