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Strategies & Market Trends : Making Money is Main Objective -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (1679)	10/30/2001 2:05:28 AM
From: Softechie	Read Replies (1) \| Respond to of 2155

EMLX TECHNICAL CHARTS (PAGE 5) from Yahoo by: prudentinvesting101 (28/M/Raleigh, nc) 10/29/01 10:00 pm Msg: 50865 of 50875 That would mean you are willing to pay a PEG ratio (price to earnings growth ratio) of 1.5. You are willing to pay 6.9x sales. At this price the stock trades for 66.51x this years EPS and 48.3x next years EPS estimates, which have come down from $0.95 to $0.51- $0.52 just 90 days ago. In recessions valuations often reach their lows, as visibility is typically limited, in terms of sales and EPS growth. This is very evident in EMLX, as the EPS estimates have come down approximately 33% for this year and 50% for next year and we have only begun their fiscal year. If people have little visibility they typically discount the EPS and trade at PEGs of .5 or 1 at the max. Many trade at price to sales ratios of 1-2x sales. If EMLX trades at 2x this year’s sales forecast it is a $600 million company from a market capitalization. That equates to a $7.30 stock. If it trades for 1x it market capitalization the stock is a $3.60 stock. Do the math and make your own decisions. I've posted a few times in the past week and a half, waiting to go short this stock and I got that opportunity today. I am short at $25.90. In recessionary periods stocks like this trade for at most 4x sales, which = $14. EMLX has two gaps in the stock at approximately $12 and $19.30. From a technical perspective I know that stocks love to fill in gaps so my first area of concern will be the $19.38 levels. If we get there, I believe we will go quickly down to the $12 levels to see if we fill in those gaps. I will watch my short position closely and make the appropriate decisions based on the stock action I see in the stock. I believe I won’t have to cover any before $19.38 but I am prepared to do so. If we struggle getting below that price point I will cover ½ my position and lock in profits. I will then cover my next ½ position once I get some direction in the stock. My gut tells me a new bottom will be formed in the $12 -$13 area, where I will cover the remaining shares. This is how I am trading the stocks. Due your DD. This isn’t investment advice but look out, this thing could get ugly fast! Finally folks, look and notice how the stock broke down today and never got above the 50 unit average past noon. Heck, we barely got above the 20 unit average. This is a 5-minute graph of EMLX. stockcharts.com[m,a]iaclyymy[pc20!c200!c10!c 5!c15!c100!c50][vc60][iUb14!La12,26,9!Lk14!Lp14,3,3] (continued)