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Technology Stocks : Broadcom (BRCM)
BRCM 54.670.0%Feb 9 4:00 PM EST
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To: neverenough who wrote (4020)7/3/2000 9:54:34 PM
From: Ingenious  Read Replies (5) of 6531
 
Bong, based on numbers alone I would suspect a pullback BUT this stock has also been added to the S&P and continues to have blow out numbers. People and analysts are looking for a stock to rally on and this stock has all the trappings. Essentially, this has gone from a value play to a momentum play overnight. AT this point, this stock has enough momentum to carry it through a 2:1 to 3:1 (ok, a 4:1 would be optimistic) and then run it through the next resistance point. The reason a 3:1 or better is likely (ie a 4:1 is a distinct posibility) is because a 2:1 will not take this stock below a perceived expensive stock level of 100/share.

A likely scenario is as follows:
1. We come closer to earnings with no warnings. Anticipation causes stock to rise from 230 up to as high as
280.
2. Broadcom annouces earnings - beating analyst expectation by at 10-20%
(Stock rises another 10% or 25 points to 300)
3. Split is announced at some amount and frenzy continues.
Now stock is 290-320 range.
a. if stock split is 2:1, stock is 145 to 165 and still expensive to the average retail buyer.
b. if stock split is 3:1 stock is 100 to 120 and still
expenive.
c. if stock split is 4:1 stock is 75 to 90, and perceived to be *cheap*. (yes, it really is the same price!!)

The froth takes effect and the stock goes up to 120, split adjusted. The smart money sells and all the frenzied buyers hang on until it drops down to 60 split adjusted (240/share).

IMHO.
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