Cube is a great short in this market. Yes, I am short Cube now! As you know, I went long Cube at the end of May at $25, bought some more at $17.75 and rode it to $28.75. Did I get out to early? Maybe, but I took my profits and came out a winner! The rally over the summer was a Bear Market Rally, which I diagnosed for you at the time. Cube retraced about one third of its decline. Cube is going to break well below the $16.75 that we saw last June. The stock is in an overall major downtrend and I initiated my short at $28.50. One of the major questions here is not whether Cube will in fact be deeply impacted by the Asian currency crisis and lack of liquidity in Asia, but the PERCEPTION of that possible impact. Cube is extremely exposed to the region and the FEAR of a possible impact on its EARNINGS will drive its stock price considerably lower from current levels. I see Cube moving into the $10-$12 range within 6 months. At that point, it will be bought out by a franchise company like Intel for about $17-$18 a share, like Chips and Technologies. Cube is not the kind of stock you want to hold in a BEAR MARKET. It will kill you, torture you, and above all, make you weep and cry when you look at your monthly brokerage statement. Its best days are behind it. To be sure, there will be 3-4 point counter-trend rallies on the way to $10-$12. But make no mistake about it: Cube is not only in a multi-year downtrend, it is in a very steep short term downtrend, where it is currently hitting lower lows and lower highs along the way. $20.25 is the most recent low. Watch it break below that soon. A short seller would take notice if it broke decisively above $25. I wish you longs well- but neither Faith nor Fundamentals will help you here. Alot of second homes in the Hamptons have been bought over the last couple of years by shorting Cube. Cube is a disaster just waiting to happen...
P.S. Although the term bear market is not official yet, Cube is presently off a third from its summer high. What do you think will happen to Cube if and when a bear market becomes official? That is to say, when we close below 6971? |
