Yes, CSCO has broken below all imaginable support lines. This selloff, even on a log chart, is deeper, and has lasted longer, than any other, going all the way back to the last recession. Therefore, I don't think history is going to be a very good guide, in trying to tell where the stock will find support, because there are no precedents. What's happening is a fundamental re-evaluation of the company by investors. Like what happened to MSFT. I got in too early on MSFT, and I'm not going to repeat that mistake (I'll probably find new and creative mistakes to make). This selloff in CSCO is not a repeat of the 1998 or 1997 selloffs. It's not just worse, it's qualitatively different.
I think I will let the chart (daily, not monthly) tell me when to buy, and I am in no hurry. As I recently did, I will buy when the stock seems to be finding support, then sell quickly if the market proves me wrong. I will buy the dips, and lighten up on rallies. The January rally, I think, is only the first of several furious false rallies. I have no idea where the bottom is, and I don't think there is any way to tell, yet. The stock is just now getting into reasonable valuation range. The future earnings stream has been called into question. The vendor financing story isn't finished (bad debts to telcos/dotcoms still need to be written off). The bottom could be anywhere from here, on down to 10, and could happen anytime this year (or next, if we really do get a recession).
I will be backing up the truck.
I will become a longterm investor again.
But not yet. |
