Sonny ---what is your thoughts on EMULEX vs EMC ?
from briefing.com this morning :
In Thomas Cronin's book "The State of the Presidency," he describes a humorous scene in which Lyndon Johnson greets Richard Nixon at the airport and gives him a great big hug. After Nixon leaves, LBJ's aide looks at him curiously and says 'I didn't think you liked Mr. Nixon.' To which Johnson replied, 'son, in this business you need to learn that a person can go from chicken s--t to chicken salad overnight, and vice-versa.'
Though meant as a quick lesson in politics, investors can learn something from LBJ as well... Take Emulex (EMLX) for example... Two days ago it was still an investor favorite... Then the company surprises the street with cautionary guidance and wham, sellers take it down 46%... Brocade (BRCD), PMC-Sierra (PMCS), Applied Micro Circuits (AMCC), Cisco (CSCO) and Ariba (ARBA) have made similarly quick trips from the penthouse to the doghouse... The speed in which sentiment and prices change in today's market, is one reason why investors need to constantly remind themselves to separate the story from the stock... My colleague Bob Green has written several recent Stock Briefs on this very point alone.
Though the kind of volatility we have seen in recent weeks can unnerve an investor, it can also create very good trading opportunities for the more nimble, risk-tolerant types... The recent bloodbath in the storage area is likely to represent just such a short-term opportunity, as the group and its major component issues are now oversold... Given the scope of the declines in EMLX and BRCD, for example, Briefing.com expects both stocks to stage sizable corrective rallies in the days and weeks to come... Similar opportunities for short-term spikes exist in beaten down chip names such as PMCS, AMCC, TranSwitch (TXCC) and Broadcom (BRCM).
All of these one-time, high-flyers are now technically oversold. That doesn't necessarily mean that they've bottomed, just that the bias over the near-term is likely to turn more positive... As bargain hunting lifts these stocks, the rest of the Nasdaq should follow.
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