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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Lee Solomon who wrote (11880)	12/8/1997 8:48:00 PM
From: craig crawford	Read Replies (2) \| Respond to of 45548

<< What's your thinking on COMS? I've been looking at COMS as a good short but it has been taking off. >> Yeah, funny how the market works. << I can't explain it. COMS has a high PE, isn't going to have any earnings this quarter and miss next quarter, the CEO puts out a statement that things look really bad and the stock rallies 8 points. >> I think this is due to several factors. First of all there is the notion that you buy the rumor sell the fact. (In this case it would be sell the rumor buy the fact). I think many people saw the recent blow-ups of ASND, and then CS and COMS on the same day as a climactic bottom. In other words the news couldn't get any worse and all the bad news was priced in. Many investors are trained to buy when the bad news hits. I think that accounted for some of the buying. Then you have the shorts. People who saw CS blow-up without any meaningful rally (closing down 7 1/2 points) thought that they could short on the announcement and just ride it down like CS. It's never that easy. Shorting a stock the instant bad news hits is a recipe for disaster. If it's that obvious your too late. I think a bunch of shorts tried to pile on when they saw COMS open around 33. When the CEO came on CNBC and faced up to the company's problems (smart thing to do) and the stock started rallying shorts began covering. This along with a few upgrades, some hype releases from COMS, and six straight rallies in the Dow (capping a 748 point rally in just 16 sessions) meant a buoyant and uplifting market. Never underestimate the power of Santa Claus. Now we have the whole disk-drive sector in trouble, the semi-equip sector in trouble, the #2 networker missing earnings badly and now the #2 software company in the world missing estimates badly. Throw in concerns about wireless and something's got to give in the tech sector. I am waiting for earnings season with open arms. Only a couple of weeks until we see some major tech-wrecks due to missed earnings. Of course my contention is there will be more bad news for COMS and the worst is not over. I will detail my reasons in a seperate post.