Hi JRI and Raymond, you guys are making sense to me. JRI I have only recently started following NTAP, and DS on that thread has my respect as well. I look for co.s that have cutting edge technology, in significant trends.
I like you, I have been just trading the upside bounces, after a pull back. Unfortunately even this type of opportunity is getting harder to pull off. It seems that there has been a change in the mkt. of late. Its like the mkt. is finally getting serious about PEs, and wants to resolve the overvaluation thing sooner than latter.
I don't have a financial back ground, and my perspective is more gut and seat of the pants, but for the moment, I am using a PE of 100, as my top bench mark, for key tech stocks, with extremely high growth.
My sense is, this mkt., wants to get this valuation correction, behind itself. So to those that are still playing the bounces, don't use margin, and follow the O'Neil discipline, of cutting your losses at 7 or 8 %, which would have kept me out of trouble, as I am now having to face a 50% loss, due to margin, and playing the trade by ear, as opposed to sticking to sell limits.
I have gotten away with aggressively swinging bounce trades in co.s, with great technology, and high PEs, in the past, but not this last time. I miss calculated my margin, and ended up selling at a big loss 12+ points down.
Selling was the right thing to do, because the PE was still too high, especially, with the level of risk, due to margin. The bounce from 12+ points down, was only 3 points above where I got out this morning, and the stock closed around where I got out, with futures not looking great at the close.
So I will take my loss and stay out for 30 days. Its too bad though, because Ntap is one of the few co.s I could find, that has an established mkt., cutting edge products, and, and fast growing earnings and revenue stream. I was looking for a bounce, after EMC announces next week, but that will have to be someone elses call now. Best of luck all. Shaw
ps, having said all the above, the fact that NTAP was up 11/16 after all that happened today, is to me a good sign for the stock. I guess my wife could open an account, and buy it.
Also I was at the online trading expo in NY, and I was very impressed with a gentleman who uses fibonacci ratios with pattern recognition, he has been successfully trading for 41 years. Based on his work, NTAP was a buy at Fridays close of approx., 40 1/4. His method sets stop losses, so in this case he would have been out at 38, or so.
I think in this case the overall mkt. down trend has thrown the timing of the trade off, in spite of the fact, that from the view of different disciplines, the stock wants to bounce, in the short term.
If I hadn't loaded quite so much margin, or non at all, and been more carefull to enter the trade, at a better spot, I might have been able to pull the swing off successfully.
PPS, I think I will call the Fib guy, and see what he thinks now.
By the way nice format for a site, it is a major refinement of the earlier effort to talk about other key high growth tech stocks, that we started to do on the Avanex thread, Raymond.
PPPS I just called the Fib Pattern guy, in Arizona, his group did some work on NTAP, since I brought it to their attention. Their alert went off to enter the trade, when it hit 32 today. He said with his system you can never be sure if the trade will work out, but his experience is that there is usually a 60% to 70% level of accuracy. Kind of cool, the timing of all the above events.
I brought up my concern, regearding the futures ect., Larry said that the worst time, when it works out, can make for the best time to enter a trade. I guess thats how you get in ahead of all the buyers to come, when the trade works out. |
