There is nothing magical or clairvoyant about my suggesting that S3 has topped out for the year. Having followed the stock since '91 (when, IMO, it overtook and past TSNG for the leadership position in graphics accelerator chip design) its price has generally been predictable assuming an annual cycle of a fall rise, winter peak, a slide in spring and a summer snooze. I don't see anything different about its fortunes these past few months which would suggest otherwise. Each year has been a record year with the exception of '93 which if I remember correctly involved some charges that affected its bottom line. Each year has been better than the previous. I do not dispute the company's fundamentals, their current products or any of the many new products that they have in the pipeline. I never would have invested in the company if I thought contrary. No, my present concern is the price weakness revealed in the charts. I agree that there is support at 16 - I see this not only in the price itself, but also in the 200-day MA at 15 3/4. I see added support from the downward trendline steming from the double top formation formed in July-Sept of '95. If you extend the line out to today's action you will see that it comes in neatly at 15 3/4 (its uncanny how these TA indicators play themselves out). I will agree that indeed there may have started a trading range between 16-18 in which case it has it origins in November but UNTIL I see the playing out of this present situation I will stay the coarse. You mention about the rising support of the past few weeks but that support gives way to the ABSENCE of buyers during each of the last three reactions and the subsequent lower highs recorded. This stock began to show some life after the first of the year with up days on heavy volume on Jan. 7 & 14. The stock advanced in anticipation of its earnings, but instead of breaking out it rolled over and came to a hard and abrupt stop on the heaviest volume of the past 9 months. It reversed itself having done no better than make a futile attempt to break 19 and finished on the day lower concluding this week at the lowest close it has seen in 3 weeks on very poor volume. No, my friend, this whole scenario began on a price break with heavy volume Oct. 17, the day after the earnings release and it continues today with its price drop on heavy volume this past week. I wonder how many frustrated shareholders there are who will stay the coarse SHOULD the stock break 16. What exogenous factor would precipitate such an exodus. Greenspan raising the rates!
Granted, I could be eating crow nest week but there are additional reasons for my having exited this stock.
Waiting on the sideline,
Keith |
