Doug, In my opinion Dell is still the dynamic mover it has been in the past but it is not going to move in the same fashion. I believe that we are moving into a new era with Dell. A transition like this takes time and until the market understands the impact of what Michael knows and I feel is happening, it is going to trade in a different manner. When dell moves, in my opinion it will move in leaps rather than two points every day. This is driven to a large degree to the larger float and the fact that more than ever, we are in a sector driven market. With a larger float, you have to have demand to hold the stock up and tremendous demand to move the stock up. What we have at the present time is more demand for tech/internet stocks than stocks that are perceived to be pure tech stocks. Perception is the key word here because Dell is still not viewed as internet related as it should be and is certainly going to be. This is the transition that I am talking about. It is going to take impactful almost exponential internet activity to get this across. Notice I said activity not just sales. I am convinced that Michael realized this a long time ago and he knows what is going to happen. In my opinion it is not Michael Dell or anyone else that will cause this to happen, it is the vehicle they have created. This vehicle is in the embryonic stage and people are going to be staggered by what this company is going to do over the next few years. I laugh when I think about Compaq trying to compete with this machine. I my opinion Compaq is committing suicide going to this half ass direct model. It is not just going direct, but you had better have something to compete with Dell and I personally don't believe anyone ever will. Just think about an Amazon.com starting out doing about 9000 million dollars a quarter and then multiply exponentially. It is scary. So if you are going to be displeased if Dell does not move everyday, then I don't think you will be pleased with Dell in the immediate future but if you are looking for the company that is going to outgrow every other company I can think of, it's DELL.
Now, to answer your question about Monday, I really do feel that the MM's do use this period just before expirations to do two things. 1. To see that Dell closes on expiration Friday at the price that will cause the most option contracts both Puts and Calls to expire worthless. It is just simply less time, motion and cost if this transpires. Now I have not checked the options to see at what strike price will bring about the most pain but I can logically deduce from what I have seen this week that it must be the 65's. That is why I think Dell will close around 64 7/8 on Friday.
2. I think they use this period also to begin working on their money making plans for the next month. Their greatest leverage is to sucker in the shorts by giving them the impression that Dell is weak and they will use this to make gobs of money when the inevitable Short Squeeze comes about. The MM's are totally neutral when it comes to a stock. they are only concerned about one thing, how can they make the most money. Dell offers because it is the most optioned and generally the most active stock on the exchange easy dynamics for accomplishing this. So they have to have intrinsic demand or they have to create it. that is why it is so important to understand that once intrinsic demand is there, they cannot hold Dell back, and they will be more than glad to see Dell rise because they will profit greatly. MM's never hold a stock back for the hell of it. It is only when it is more profitable to do so. So for your answer. I think we will start seeing a gradual increase in Dells price beginning Monday.
Sorry for the long answer but I feel a lot of people on the board feel like they are being screwed over and I don't feel that is the case.
Regards
Voltaire |
