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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Bill Cotter who wrote (40496)	12/20/2003 2:58:27 AM
From: Johnny Canuck	Respond to of 69211

Thanks Bill, I caught that news story. Someone asked me about the short comment in a private message. As I said in my reply this is a limited short. It is based on the following reasons: 1) The technicals for RFMD areweak 2) The fact it was being dropped by Nadaq 100. As you noted a lot of mutual funds will be selling the stokc and buying from the replacement stocks. Also the move below $10 alos will cause some other mutual funds to sell as they will not hold stocks that trade below $10 for an extended period. 3) My over all market indicators still expect a bit more down side. We could end up ocillating in a range for an extended period though where small and mid-cap stocks continue to sell off. So the index might not move much, but individual stocks willl get killed. Keep in mind I also beleive we will get the January effect Tim mentioned. That is why this is a time limited trade. On the plus side RFMD has sufficient backlog to meet the revenue and EPS estimates for next Q. Being a high P/E stock though they need to do more than that to keep the price level above $10. The market share gains have been impressive, but since this business is one of the one that still has a relatively high gross margin, it will probably attract deep pocket competitors in the near future. AS we have seen RFMD has had problems managing expectations in the past.