Ben, Honestly, IMO the stock will trade in a $16.25-$20.50 range for a while until its technical pattern improves. The up/down call ratio has flipped to positive, meaning that the stock is under accumulation again from about two weeks ago.
But the way we bounced down from $20.50 last week makes me think that $20/share will be a pretty tough resistance level for a while.... So that suggests two strategies: sell around $20/share and buy around $16.50/share. That is try to play the trading range. Or two, buy and hold long term, but write covered calls, in this case either the 17.5's or 20's for the time being and collect the premiums while the stock is stuck in a trading range. The premiums are quite large right now- about 22% for the July 17.5 call option for e.g. So some one out there thinks that CREAF is headed up!
Fundamentally I think that CREAF;s acquisition's and strategic alliances were savvy. CREAF already had a position in the high end of the sound market, and in Retail and resellers channels- but no presence in the low end of the market or OEM deals. The acqusitions will help expand that niche.
As to graphics CREAF was limping along doing OK at best in selling graphics cards. Now with the strategic alliance with 3DFX, CREAF at least will bring their graphics cards into the equivalent range of Diamond etc. That is smart too.
Macroeconomically do not forget the Asian slowdown economically. To me it is getting clearer that we are within (IMO) eight weeks or so of the financial markets bottom in Asia. But the actual economic recession itself has yet to come. Let that work out a little bit and see if Japanese Banks remain sound and whether China can get by without any large devaluations of the Yuan. So no rush here....
Also watch the Clinton matter in the US. If the matter snowballs and hinders Clinton's ability to govern, then the financial markets will think that that might hinder Pres. Clinton's ability to get Congress to accept the needed IMF packages in Asia to help out our friends in SE Asia. That would cause a quick sharp pullback in large caps in the US IMO, and probably a lesser pullback in small/mid caps IMO....
Finally Iraq will/should only be a sideshow for a short period. Unless some allies jump to their aid, then it should be a few fists thrown by both sides and then that will be it. While adjacent Arabic and Persian countries may verbalize shouts of solidarity, the Middle Eastern Governments are actually quite pragmatic. Realistically Saddam still has a biological arsenal that could croak a huge chunk of the area's population- and quickly. And accidents could happen- particularly in a country which is not politically stable. For e.g., rebel Kurdish Bands shell an Iraqi Army position and accidentally release biological agents which drift with the wind. Iraq's neighbors would quietly like his biological capacity to disappear and if the Americans and British want to ride into town like some old west gunslinger and do the job, well then so be it.....
So CREAF IMO is a great company- and a company that has changed itself significantly in just six months. But expect sideways action in the price range for a while as the technical parameters of the stock while continually improving, have not quite yet moved back to a neutral reading... But they're heading there!
Sincerely,
Doug F. |
