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All,
As I said yesterday, I'm going with Iomega (IOM) for my weekly
pick. I've doubled up on this position which is something I don't
usually do. However, the fundamentals still look good to me and they
only missed their earnings by two pennies. Earnings estimates for 98
are still around $0.60 which would give a forward PE of less then 15.
That's cheap for a stock whose earnings and revenues are growing at
over 100% per year. Of course the earnings estimates may be wrong and
growth may slow (or accelerate), but I like these numbers. Now to the
chart.
IOM at 8 1/2 is close to the bottom of a Long Term Up trend
Channel (LTUTC) at 8 1/4. That LTUTC dates back to 1995. When it
broke through the bottom of the Intermediate Term Up Trend Channel
(ITUTC) after the close Thursday on the earnings disappointment, it
lost almost 30% of its value in after hours trading. However, it
stopped short of the bottom of the LTUTC. Then on Friday it traded in
large volume in a narrow range about a quarter point above the bottom
of the channel. Yesterday, the Volume died back and it tried to move
up a little but couldn't. At this point, it looks to me like the
LTUTC bottom will hold. I went ahead and doubled up yesterday since
the stock was close to the bottom of the channel and I set my stop at
7 3/4 for a good risk to reward ratio. A more conservative, and maybe
smarter, play would be to wait for IOM to break through the top of the
Short Term Down Trend Channel (STDTC) which is now at 12 but dropping
rapidly.
Jim
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