I do not short nor play options, and actually have gone long on the irrational after market reaction. I fully expect a bounce from here. I think that most participants already factored the lousy Christmas season in (ML down grade got us from $69 to under $40 in a hurry). As I stated, I do not think that here is the end of the decline, but I expect a short term DCB after a wobbly opening. Very short term, till next Tuesday, the market will try and guess the next Fed step (they'll start tomorrow listening to AG talking to one of the committees in congress). After a possible euphoria from another fed cut, I think that we will go down into what I have been calling the February massacre. Hopefully, we do not go into a deep recession (but the recent numbers are quite scary, thus the Fed's urgent move Jan 3). I am more concerned, however about Asian markets destabilizing, since this time around, we will not be able to pull what we did in 1998, our trade imbalances are simply too high. Medium term, therefore, despite the old dogma "don't fight the Fed's", I am not sanguine on the market in general nor SNDK. There will be a price where it becomes a real bargain, after all, with a book value approaching $13/share, you get some real "protection", particularly in view of the fact that SNDK is still operating in markets that are intrinsically growing faster than the economy.
Zeev |
