Sold my TXN calls. Held 6 days, made 27%
Playing the 30-36 range has worked so far, 3 profitable trips. At some point, the semis and semi-equips are going to take off, but I'm betting it isn't yet.
The only way to deal with the uncertainty, is to do a lot of Due Diligence, and then make your best guess. Stock-picking is about predicting the future, and uncertainty is impossible to eliminate, all you can do is lessen it.
There is no contradiction between TA and FA. What you label TA, is really Momentum Investing. Momentum Investing and Value Investing are opposites. I use FA to determine the general range at which I'm willing to hold a stock. Then, I use TA to try and guess when the stock has stopped going down. For instance, I want to buy NTAP, TXN, and AMAT sometime during this bear market.
NTAP has a bad-looking chart (TA), and is still at too high a PE (FA). No way I'm going long NTAP now. I might even short it on rallies.
TXN has a chart with weak support at 29-30 (TA), and a PE at the end of it's 5 year range (FA). So, I buy it at 29-31, but sell on any rallies to 36, as it has stalled there repeatedly (TA). At some point, once I think the fundamentals of the semi industry have bottomed (FA), then I will buy it (hopefully on the last dip to 30, if I get lucky), and hold longterm.
With AMAT, the chart looks like strong support at 40, and resistance at 50 (TA). However, my analysis of the industry is that the bad news isn't all in the stocks. Industry bookings are going to continue going down for the next 6 months at least, and the valuations are still way above where they have bottomed in other cyclical troughs. Thus, I decide (using FA) that the strong support at 40 (TA) probably will fail, sooner or later. I've been shorting AMAT at 49, and covering at 45-40. I won't go long AMAT until 40 has broken, and a new, lower range has been established. |
