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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: lh56 who wrote (85157)	6/25/2002 3:44:54 PM
From: lh56	Respond to of 99280

"25-Jun-02 QLogic (QLGC) 38.07 -3.29: During normal market conditions, buying the relative strength leaders (those stocks holding up better than the market/peer group) is often a good investment strategy... But in a market such as this, today's relative strength leader is tomorrow's market victim... Well, it looks like tomorrow has finally come for QLGC... Leading maker of Fibre Channel HBAs (host bus adapters) is breaking down badly in today's session, as stock recently fell through important support at 38.12, amid a sizable increase in volume... Though part of this afternoon's retreat can be attributed to overall weakness among storage-related stocks in response to EMC's debt downgrade, the technical breakdown will be an invitation to short-sellers to ride this relative strength leader down hard... We saw similar action in Mercury Interactive (MERQ) early this month, after that one-time leader broke down after a long sideways pattern... That stock fell nearly 21% after taking out major support... A comparable move by QLGC would put the stock in the 30 area... And if the stock were to follow the lead of the broader market and retest its post-9/11 low, we're talking a potential decline from current levels of roughly 55%... Stock's fundamentals offer little comfort in today's market either... Yes, QLGC has done a better job of meeting street estimates than most tech companies... But in a market as ugly as this one that still doesn't justify a trailing twelve month p/s ratio of 11.2x or a trailing p/e of 45.3x. -- Robert Walberg, Briefing.com "