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Strategies & Market Trends : The ultimate play:STRADDLES on earnings announcements.
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To: farouk a. hassieb who wrote (34)7/13/1996 11:51:00 PM
From: Jeng Chiu   of 140
 
farouk,

I follow SUNW pretty closely. From most sources, I've heard SUNW will report "good" earnings. I don't know what that means exactly.

On Wall Street, all that seems to matter is beating consensus estimates. This quarter, the consensus is .84 per share. That's .14 higher than last quarter's estimates and .21 higher than same quarter in 95. So SUNW may grow at a 30% rate and still miss estimates. I'm just afraid this quarter, the analysts have raised the bar too high. But I do believe SUNW will come w/in 1 or 2 cents either way (not a Motorola)

SUNW was hit hard the last week. They lost almost 6 points. I think the support around 50 is not too strong. If earnings don't meet estimates, I see it trading between 42-48 over the next few months. If earnings meet or beat estimates, it'll probably trade in the 54-58 range.
Since the stock has already been beaten down, I don't forsee a massive move either way. Yes, the volume is high, but I don't think there will be more than a 2 point swing this week until Thursday.

By the way, does the low volume in Iomega trouble you? Or do you still think there will be wild swings once earnings come out. In other words, is straddling still a good idea or has this pretty much settled into a stagnant trading range.

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