ratan,
My views on CIEN, and the reasons, are posted previously here and elsewhere:
Message 14902292
Message 14883415
Message 14934893
Message 14935121
<< And if CIEN disappoints what do you think will happen with the whole fiber optics sector?? >>
Well, lets see. Yahoo lists 18 companies in the fiberoptics sector. These 18 companies, including CIEN, have valuations as follows (numbers are group averages):
P/E: 109.5
P/B: 11.0
P/S: 17.6
Only 5 of the 18 companies have P/E ratios. CIEN's P/E is by far the highest, about 4 1/2 times that of the next highest, GLW, which has a P/E of 84. CIEN's P/E is also more than triple the group average.
CIEN has the second-highest P/B in the group, almost triple the group average.
CIEN has the fifth-highest P/S in the group, roughly twice the group average.
So, both relative to its peers in its sector, as well as to the Nasdaq in general, CIEN has an excessive valuation.
Many in the sector are already severely beaten down, some trading at less than twice book, one (FTHL) trading at book value. Several have excessive P/S, and so will likely feel some collateral damage if CIEN goes down hard. But those who have already corrected will likely not.
<< Are'nt you scared of the fact that Bush may be declared winner before the week is out? >>
Yes, some. But regardless of the outcome, I think CIEN will get hammered, if they miss earnings. A lot, but not everything, rides on this. I'm not so sure that a resolution of the election will have that much effect. I suspect this has already been largely discounted. Any effect in CIEN's case will be dwarfed by the effect of an earnings miss, if they do. The market is much, much more concerned with earnings than with politics, and only cares about politics at all to the extent that it perceives politics may influence earnings and the market environment (i.e., the ability to foster earnings growth).
<< Are you suggesting that the 12M+ volume was big boys liquidating? >>
No. Today's volume, 12.8 million, occurred on an up day, and was less than the previous session, also an up day, and the session before that was an up day with greater volume still. So, volume is diminishing as the stock traded up 3 up days in a row. Before that, volume was increasing linearly for three straight days, each one a down day. This is a volume envelope consistent with increasing selling pressure, and decreasing buying pressure. More and more people are heading for the exits, and there are fewer and fewer buyers. Also, note that today's volume was actually less than the 10 day average volume of 15.7 million shares.
As to the afterhours trading, I can't really comment on that. I consider afterhours a different beast entirely, frequently having little relationship to what happens during the regular sessions.
Nothing is certain, but collectively, what I've posted I believe to be most consistent with a stock running out of upside momentum as it corrects to the upside, and approaches resistance. For this reason alone I think it likely to fail, and resume the clearly established downtrend. The other two major factors which potentially could add an enormous downside tailwind are an earnings miss, and excessive valuation relative to other companies in the sector, and the Nasdaq in general.
A wild card, and potentially a third major factor to push CIEN down is analyst opinion, which remains completely at odds with the economic realities of CIEN, as well as the chart and technical picture. This is not a surprise to me, of course, but is rather typical of analyst opinion. Still, since analyst opinion is so bullish on CIEN---at a time when an increasing number of independent economists are forecasting growth slowdowns, global recession, a corporate credit crunch, and a weakening dollar, and also at a time when virtually everything in CIEN's chart points to more downside---there exists the potential for analyst downgrades, though these may not occur for some time.
JMVHO, as always.........
Walkingshadow |
