Robert, RE: trading vs. holding
I have talked about this a few times in the past, and my general notion has been that most of the "speculative" y2k stocks will provide great trading opportunities until about Q3 of 1998 ( at which time I plan to go long)
Basically, the stocks should be traded based on the technicals, until the fundamentals catch up.
However, even some of the leading y2k companies that have great fundamentals, such as KEA, provide good trading opportunities when they are overbought and oversold. I own 3,000 shares of KEA, but instead of trading the stock, I use a covered call strategy to maximize the profit potential.
For instance, KEA is going to report earnings on the 11th, and I feel that the numbers are going to beat the street expectations, but I also think that the price of the stock has already moved up due to the anticipation of the numbers. I will, most likely, sell some covered calls after the numbers are released. I feel that there will be some profit taking.
Until around Q3, I feel that ALYD will be volatile enough to provide some good trading opportunities and once we see the flood gates open, I would go long and then use covered calls to maximize profits.
If you remember I was the one who said that ALYD was overvalued after the Roth conference in N.Y. and stated it was time to sell at $26.00 Those who did sell at that point took some good profits and then were able to buy back in at $14. At that time these same characters such as Tech Master, mad monk, etc. were trying to convince people to go long and not trade and making all sorts of wild predictions.
Well, we saw who ended up being right.
I will continue to trade the options based on the technicals and once I feel that we are going to see the flood gates open, I will either buy the stock and start writing some covered calls, or buy some Jun. or July options.
This is the way I see it right now:
There is resistance at $19 5/8 and if the stock can close above this line, the next stop should be around $21.50
The support is at approx. $17 1/6 and I would take profits if the stock breaks this line.
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