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Hi Bob, Here's your answers.
1)If you felt the stock was going to go lower what is your reason for not shorting the stock?
Shorting stocks isn't in my trading strategy. If I have a strong enough conviction that a stock is going down, I buy put options. I've been watching the Jan 15 puts on BBY. Haven't pulled the trigger yet, but still watching. I think I already missed my opportunity here. They were trading at 2 3/8 x 2 3/4 a few days ago and now are 2 7/8 x 3 1/4.
2)What effects will a good or a bad christmas have on the price?
I think Nov sales are going to come in bad. If memory serves me correctly, I believe they release these numbers on Dec 5. If same store sales are down again, the stock will likely decline to 11. I don't think the market is focusing on Christmas just yet. They want to get through the Nov sales report. A bad Christmas and I think the stock will trade to 10. A good Christmas and the stock will likely trade back to 14 1/2. I see a lot of resistance on the chart in that area and don't think we could see a rally through there until the first quarter of 97.
3)When do you feel this price will occur (dec, jan, feb)?
I kind of answered this in #2.
4)What kind of position will you take if it reaches that price?
If the stock trades to the 9 1/2 to 10 1/2 range, I will very seriously consider buying it. The book value is in the low 10 range, but I want to look at the balance sheet at that point to see how their debt, cash, and equity look. Also want to check out the technical condition of the stock if it gets down there.
Dan |
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