Today's action was technically very bad. The breakdown occured too close to the opening of the market and it was on heavy volume, even when the market had opened strong and many beaten down companies were trying to recover. Then the stock closed on a downtick indicating that there are many sell orders still open at 13 5/8 (where the ask ticked down to.) Why is this happening to a stock which had a positive earnings surprise is hard to understand. The closer I could try to explain the action to myself (not knowing whether we failed to beat any whisper number) is based on the following:
1. Asian connection -- nobody can believe that this company won't be hurt be the Asian flu. If it hasn't so far, it will!!!
2. The trailing PE is high and could only be disregarded if one believes that growth will be on track. With the prevailing attitude, in the market, people are factoring in the worst possible scenerios when future is concerned.
3. Many good companies (CYBE, VLSI, QNTM, CPU, etc...) are broken down. Why not CREE -- This is not my opinion. I am just trying to figure out what some others might be thinking.
4. You mentioned the appearence of an article about CREE in some magazine. Didn't Peter Lynch say that he would buy a stock when he hears that an article is going to appear and sell the stock when the article actually appears?
5. Somebody on the Yahoo thread said that he bought the stock several times at 15 only to sell it later at 17 1/2. The saying, in the market goes like this "Once you find the key they change the lock -- or something like that. Saying this, publicly might hurt the stock.
In some, I have the feeling that we may have a good chance to avrage down, very soon. But then, it could be that this last downtrend will be broken tomorrow, in the general market, as some signs today indicate.
Good luck...
Ghassan. |
