Dell is a great stock, but like all stocks, it doesn't go up all the time. I could be wrong, but like I've said so many times before, let's just wait and see. Dell almost always declines in the latter half of August, even when it announces great earnings, like it did last year. I'm not saying it's going to plunge, it will just drift downward. It will recoup its losses and then some by mid-September. I think I have forecasted pretty well for this month so far when everyone thought Dell was going to shoot up during the 2 weeks before earnings announcement. Check out some of my past messages:
From July 30, message # 55327:
Option strategy for Dell right now: Write 120 calls or 105 puts.
Note that writing options is riskier than buying them, especially if
they are naked, but rapid time premium decay is on the writer's
side now, and I think there will be little chance of assignment at
expiration. And since Dell options are expensive even now, the
profit will be a nice one.
I think there is little chance that Dell will rise above 120 until
mid-September. If it does, it will only be for a day or two before it
drops back. Your 115 call MAY be profitable, depending on what
you paid for it. If you paid more than $5, then you will probably
lose. What you can do, however, is wait until next week, then sell
during the beginning-of-the-month spike. The market may go up
strongly tomorrow and Monday, so I would wait at least until then.
IMHO!
I was wrong about the beginning of the month spike. It usually occurs, but didn't, for various reasons. But, overall, I think I was right on the money.
From July 24, message #53858:
Folks, I was just looking at Dell's graph last year. It seems it didn't
do that well at the end of July and all of Aug, in spite of earnings.
So I would be especially cautious. Save yourself the anguish.
Don't buy on margin! I don't think it will reach 130, or even 120!
It's p/e is still above 70. There's still a lot of risk here, so be
careful.
Now, it did reach and surpass 120 briefly, but only because it announced superb earnings and a stock split, but this won't keep the stock above 120 until mid-September.
But check this out, from Aug 15, message # 58398:
Hello all. I see that Dell closed down today. Unusual being so
close to earnings. Nonetheless, I still think it has a chance to touch
115 by Tuesday morning. Maybe a little higher, if it's not dragged
down by negative market news or pessimism. During this past
year, options expiration week has been a good week for stocks, so
this factor plus imminent earnings announcement might push Dell
up to 115 or a little higher. Just don't risk what you can't afford to
lose.
I would say that I called this very well! Dell reached 114 1/8, then declined. Since Dell reported great numbers, it did shoot up again, but I can almost guarantee, it will be coming back down again.
Look. I never said I'm right all the time, but I think I do a fair job of forecasting the market. And I KNOW that the option plays which I have stated in advance of all this paid off big. Just look at my profile and read the past messages. I don't have time or space to post them all here, but you can read them all if you like. You'll see that I have been fairly consistent and basically right. Yes, sometimes I do change my forecast, which is only natural when new information comes to light. I would be stupid not to. But I have still been pretty consistent, nonetheless. You'll see that the option plays that I suggested all paid off. On the other hand, those of you who bought Aug 120 and 130 calls probably lost a lot of money. Even the 110's and 115's weren't that profitable and may have been losers, even assuming that you sold at the top--highly unlikely, because you paid so much for them to begin with.
My record speaks for itself, and no, I didn't cover every possible scenario. I made some mistakes in details, but I was basically right, and my option strategies were definitely right. I know everyone here disagrees with me, but we can all wait and see what happens.
There's nothing like having reality to support your position. Have a great weekend! |
