Hi again, I too watch Andrew. I was lucky and sold Andrew just before earnings. I was going on vacation and did not want to have the stock going into earnings release! Whew, glad I did that one.
I also tend to do the same relative to stocks in the $5.00 to $12.00 range. I use TA for entry and then put in stop limits. I don"t use it as much for exit because I like to let my profits run , but use the stop limit as a protection. Here is another interesting article.
This past week has provided traders with several interesting
opportunities. When we say "interesting opportunities" we mean
potential trades that are best suited for only the most aggressive
investors. These situations periodically arise because a great portion
of the technology sector suffers from a case of "exuberant valuation
syndrome."
We are believers in the technology revolution but in the past few
months we have decided to nail down some of the enormous profits our
equity holdings have earned this year. The cash we raise from our
equity sales will be allocated when we feel the market is in a little
less of a party mood. Today, it appears that the party is still raging
although a few investors have had their portfolios sliced as they tried
to catch falling daggers.
It is true that the Gods of Wall Street occasionally drop a few pennies
from their sky boxes. This week they decided to rain on the masses by
dumping stock in companies like Cymer (CYMI), Motorola (MOT) and PMC
Sierra (PMCS). The shares of Motorola enjoyed their dead cat bounce,
much like the bounce we saw in Cymer earlier this week, but it is
highly probable that they will head south as we approach the end of the
quarter.
Speaking of Cymer, the shares have been bludgeoned after management
canceled a presentation to an investment conference and announced that
adjustments would have to be made to the third quarter earnings
release. On Friday, the management of Cymer decided to announce that
the analyst community was all wet in their assessment of the problems
by quoting one of their primary customers: "Nikon is concerned by the
recent reports and disputes the suggestion that Cymer's product or
performance is limiting our DUV stepper and scanner ramp-up. There are
no technical problems in Cymer's lasers that are keeping Nikon from
shipping DUV steppers. Our lithography tools using Cymer excimer lasers
have been successfully installed in many chip-maker production lines
and are in use for the production of advanced integrated circuits",
chirped Teruo Shimamura, managing director of Nikon's IC and LCD
Equipment Business headquarters.
Okay, business is fine and Nikon is happy so what's the deal? Is it
possible that the stock was just too expensive? Even if Cymer shares
were too expensive (which is what we believe) the drop in price has
been so swift and so reckless
that stepping up to the plate just to play the second dead cat bounce
is probably worthwhile. While we were attending SEMICON/West we had the
opportunity to speak with a few of Cymer's employees and they explained
to us the constraints the company was facing in the people department,
"Business is very good but we simply do not have enough engineers." We
believe the people problem is really the rub here and it will not
resolve itself in the very near future. Despite this, Cymer will
continue to do a substantial amount of business
and the near term dislocation caused by what the company calls
"potential developments" only presents investors with trading
opportunities.
Fool me once shame on you, fool me twice shame on me. It seems like
every fourth or fifth quarter investors receive an announcement from
Motorola that business is not as good as the stock price would suggest.
This year the paging segment is under tremendous margin pressure and it
will impact results for the next two quarters. Wait a second? Is the
paging business
the only thing that has problems? Doesn't seem like it. The company
just scrapped their DRAM manufacturing effort and will be taking
charges for the wrap up of their Macintosh PC clone division thanks to
Apple's decision to stop licensing its operating system. In a nutshell,
it seems like something is not quite right here.
Rounding out portfolio slicing for the week was the drop in two
networking companies. PMC Sierra has been under pressure since a group
(Bipolar Integrated Technology, Inc. ("BIT") that was acquired on
September 3, 1996 by Sierra Semiconductor (prior to the name change)
way down at $11 per share decided to literally dump their holdings on
the open market.
Of course, it does not help when there is talk of margin pressures and
slowing business
conditions in the networking segment. In our opinion, margin pressures
have more to do with the sell off in PMC shares than a slowdown in
sales. |
