I have limit sell orders for QCOM, to sell all I hold, in increments at 60, 65, 70, and 75. Just entered those orders. If they all clear, I will be out, at the same prices I bought last year. I am operating on these assumptions:
1. we are still in a bear market.
2. in bear markets, rallies fail.
3. in bear markets, valuations get compressed. So, even if the story on a stock gets stronger, a stock will still probably go down, especially those at high PEs.
4. At 60 and above, the downside risk is higher than the upside potential, for QCOM, until this bear market is over. The risk comes from macro and sector risk, not company risk.
5. what we are seeing, since the SOX was at 455 a few days ago, is a classic bear rally. Gaps up at the open, panic buying, a surge of fear of missing the bottom, while the fundamentals continue to deteriorate. SOX is up 40%, and so is QCOM, off recent lows. The CSCO and INTC reports, for unemotional investors, should have been a reason to set new lows on those stocks. The opposite reaction is irrational.
6. the next leg down, for QCOM, the SOX, and the Nas, will be when investors realize that the downturn in fundamentals will continue, long after inventories get cleared, because end-demand still has a long way to fall, as consumer buying follows business spending off a cliff. It may take a while for investors to figure out, which is why the puts I'll continue to buy (on NVLS, JNPR, MU, NTAP, CSCO), are all 2002s. I started buying puts on 4/12, and I will buy more in widely-spaced increments, if we go higher. |
