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Follow Up: Interesting day. At the start of today, Amzn could buy Borders BGP 23 1/2 times with their market cap. At the end of the day, they could only buy it 19 1/2 times over! ABX dipped intraday, providing a buying opportunity, then closed higher on the day. The "vicious corrections" part of the scenario outlined in post #2653 is in full force, and within the next day or two, the "stunning rallies" portion should unfold. RE. SFE. If one uses the Jan starting point of this rally, at $26, instead of the recent $36 low, and applies a 62% correction of the move to recent highs, the downside target is $61.80. Todays print low was $62 5/8. The 50 day moving average, which has held all pullbacks since Jan. comes in at just over $60. If one uses the Oct. low as the starting point, the target pullback would be to $56 1/4. Conclusion: I see a lot of support in the $60 to $62 area, and expect a sharp tradable rally to commence shortly. SFE could rally right from the open tomorrow, but should it pull back in the $58 to $64 area, between 6:45 and 7:10 EST., I think it would provide a great trading opportunity on the buy side. Stops advised. Intermediate term, a lot of technical damage has been done, and unlike the situation SFE has been since the $46 breakout to new highs, there is now a lot of resistance as many have been trapped at prices between $70 and $ 120 and are praying to their God [s] to let them sell out at breakeven. A strategy regarding the situation discussed in post 2653 emerged late in the day. I would not short individual overpriced high growth/Net stocks, just to risky, but how to take advantage of their weakness?. Strategy: own a diversified mix of value stocks that are showing great performance, and hedge by shorting a like $ amount of the index QQQ trust traded on Amex. This shorts the biggest and most overvalued [NASDAQ 100]. QQQ was down around 5% today. [If the whole market tubes, the value stocks will go down, but the QQQ will go down even more, thus providing a net profit IMO]. Another opportunity will present itself, as the QQQ will bounce soon. Will be ready this time. PS, the old rule of thumb was that stocks go down twice as fast as they go up. In this "new era", that might have to be revised. Thanks wellabs for the interesting charts. The second chart is an eye opener, and shows just how much room there is for the value/growth gap to close. Mike |
