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Technology Stocks : PairGain Technologies -- Ignore unavailable to you. Want to Upgrade?

To: margin_man who wrote (20034)	2/3/1998 11:40:00 PM
From: Rick Slemmer	Read Replies (2) \| Respond to of 36349

Is there room on this thread for a PAIR bear? A look at the chart reveals a few things about PAIR you should consider before buying options. 1. Yesterday and today were two attempts (both on strong NASDAQ and DJIA days) to break through PAIR's 50-day moving average. Both rallies failed. 2. From late December through late January we see a series of three peaks, each one lower than the last. 3. The stock's Relative Strength and On-Balance Volume are declining. 4. CCI is indicating "overbought" at +100 (on a -200 to +200 scale) 5. Volume has just about dried up in relation to the May-August period. A split-volume chart and resulting 21-day moving average shows more down volume vs. up volume. I like Pairgain; it's a good company, and someday it'll be at 42 or higher again. But short-term, for whatever reason, Wall Street doesn't want to buy the stock. The indicators above tell me that someone with a lot of shares is selling into rallies and is trying to dump the stock as quickly as possible. A word of advice: Please don't buy call options at overhead resistance levels. PAIR has to cross over its 50-day MA (and in most cases the 200-day MA as well) before any institution or fund manager will look at it. After failing the 50-day MA test yesterday and today, PAIR will probably try to confirm support at 17 1/4, and if that fails, at 15. Sell covered calls or buy puts at overhead resistance; sell puts or buy calls at support. I trade PAIR most days, and it certainly reacts more to down market moves than it does to up market moves. Good luck! RS

To: margin_man who wrote (20034)	2/4/1998 12:54:00 AM
From: Marc Trombella	Respond to of 36349

I really agree with somebody that mentioned earlier about PAIR taking off the last half of the year. At the COMNET conference last week, it was mentioned that Compaq, Microsoft and others in on the ADSL project would like to see the ADSL standard in place by the end of 98. Analysts claim there is too much optimism, and claim it will be more like two years. At any rate, PAIR needs the growth to sustain a higher PE trading ratio (I.E. Tellabs, LU). by clipping the .05 off 98 earnings of .85 hurt the upward momentum. that translates into a loss of growth of around 5.9%. Taking that into account the revised growth rate is around 20%. PAIR has a PE of about 23.8. Tellabs has a PE of around 29. I would like to see an upside revision in earnings for 98 or 99, to gain more confidence to trade in to PE range of around 30. PE of 30 is a price of $24 times 98 estimates. Market dictates PE trading ratios for each sector. Telecom equipment seems to be 20-29. PAIR falls about in the middle. Last summer PE trading was around 50. Translates into a price of $42.5 for PAIR X 98 estimates. We'll see maybe after first quarter earnings.