We all follow the same stocks on here -- we might as well talk about the interesting ones.
I think Sun Microsystems will disappoint and/or test the 34 level. If it breaks 34, and hits 30-31, it's a trading buy. Longer term buy depends on how bad the disappointment and what most recent macroeconomic and Asia data are. We can't support PE's of 30 with rising interest rates, slackening Asian demand and declining earnings, at least not in the six month term.
I expect Ciena and Qualcomm to rebound from their recent lows and trade up and down until both announce a major new contract. Exit is QCOM at 55, CIEN at 46-48.
Anyway, I just wanted to make the comment that I am surprised by the strength in ASND. I expected it would retreat from 35 and hang around into the 32 range, where it would be a fight for 30 or 35 for options expiration. This may yet happen, as there is still time for the market to move before expiration.
I think ASND at 35 is getting to the rich side. Any major networker disappointment, including either BAY or CSCO, will send technology stocks reeling. I see upside possible of 38-40 and downside of 28-30, , so the risk reward is not that impressive. When you buy ASND, you bet on CSCO and BAY, and I am just not comfortable doing that.
If ASND does drop to 30, or God forbid the mid 20's again, it's a strong buy. 35 it's a hold, 40 it's a moderate sell. The thing that prevents 40 from being a strong sell is that I would have to see the options activity to gauge the chances of a takeout. I don't think that will happen soon, but who knows?
Matt |
