re: AMAT short:
I did a lot of range-trading, in both directions, in various techs, all through 2000 and 2001. Covered my last short a month ago, and I'll be doing all my range-trading in the long direction from now on. Sure, valuations are high, high even using 2003 earnings and sales guesses. And there is the everpresent danger of another "exogenous shock". But there are numerous signs, from numerous companies, that we've seen the bottom in sales, earnings, and margins. If AMAT bottomed at 27 in 10/01, I doubt we go lower than the high 30s, now that NVLS, TXN, XLNX, etc., etc., and reiterating or raising guidance. When was the last time a semi or semi-equip warned?
In particular, with AMAT, I'm holding lots I bought last year at 27.5 and 30, and I start selling them in increments, if/when AMAT hits 50. (the higher-cost lots, bought at 32.5 and 35, are already gone). AMAT spent most of 2001 in a 40-50 range, and it's quite possible we do the same in 2002, maybe bumping briefly above that range when everyone gets briefly Exuberant, and dipping briefly below when the next battle of the Permanent War On Terrorism gets going. Iraq is going to be tougher than Afghanistan.
If I was going to short AMAT, I'd use put LEAPS, not an actual short. This stock can gap up 20%, when unexpected good news happens. At least, with puts, there is a defined built-in max loss. Also, I'd wait till it hits 50, and then have a tight stop-loss. If we break resistance at 50, it could run. If we can't get above 50, then 40 is possible. But I'd rather sell my long positions into strength, in this market, than try to short. |
