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Curious and
Curiouser
It's puzzling to me as to why CIEN and INFN continue to show
significant weakness over the past several weeks. ALU is actually
making small gains in contrast. I understand lt cap's view that
INFN is fully valued, but that was when the stock was around 23-24.
CIEN had a good enough CC for the stock to rally to 25 and
the avg. PT was/is $27.50. Given the inevitable secular growth in
the sector, I find it hard to find a reason for the weakness. I'll
hold, wait, and sell some calls into a decent rebound. But just
can't find a reason for this - they're not CAT (nor VW) so what's
the problem?
I understand that Yellin's comments are all about anticipation
of what the Fed will do and when. But on the surface, it seems to
be a 'play' with 'SYellin cast as the 'Red Queen'. Last week, China
was cited as a worry, and a reason not to raise rates. So the
market treated it as it had just been discovered that China's
slowdown is a problem. Today, she said that China was not a
concern, and would not be a factor in the fed's decision, and for
all practical purposes there will be a rate hike in Dec. and then
gradual hikes from there. Yellin says China is a worry - suddenly
that's 'real'. She says it's not a worry, suddenly that's 'real'.
It is as though the market believes there is some secret info the
Fed has on the state of economies, and it becomes real when spoken.
Words are just what Yellin means them to be, no more. no less. And
actually, being less unkind, one can see today's comments as a
clarification of what she said after the FOMC meeting, which just
puzzled some people as to WTH she actually meant, and uncertainty
leads to turmoil in the market.
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IMO, both CIEN and INFN will recover from these levels once the
market turmoil passes, which if my gut feeling is right, we have
another period of declines coming, could be another 8% or so.
Hopefully it is not more severe than that. I too feel the
rest of the year is shot, there will be plenty of Tax Loss selling
to keep the market range bound. That, however will provide a
decent opportunity for next year for those with a long term horizon
(i.e. with more than 18 month holding period).
Welch (INFN's CTO) stopped selling in April (from memory), that
tells me he sold enough and feels comfortable to hold his still
sizable position and still sees opportunities down the road.
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Author:
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LongTerm
CapGains
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Subject:
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Off Topic
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Sentiment:
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Neutral
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Date:
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09/28/15 at 8:40 AM CDT
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lt cap,
Thanks for the INFN/CIEN sector take - I would not have known
that the INFN CTO stopped selling in April, which equates for
practical purposes to an insider buying, which is always a good
sign. I do believe you're right, that there will be a flood that
washes out the market pretty well (seems to have started up today,
in fact - TTWO down 4 1/2% which must mean the End is Near - except
EA is also down the same amt.) And hopefully, after the draw
down, the strong names will rally back in time. Unless this is the
'big one', when all chickens come home to roost, and facts such as
our $17 trillion debt start to become something other than abstract
concepts. It's an interesting idea to consider that in what might
come next is that there is no place to 'hide' - strong dollar hurts
our earnings, the fundamentals of a real recovery are built on
sand, as housing stalls and commodities continue to have slack
demand, China and other emerging markets become a drag rather than
a catalyst for the market, yada yada. (KBH down 7%+ just today
alone - wow.) I look at stocks like POT which crested around 35 and
it's now 20 on the way down, and the dividend is bloated, as is
common with so many of the commodity dividends, to more then 7%.
Same with KRO (makes Titanium dioxide), with a dividend ballooned
to 10% and price scraping new lows, on and on. It's almost tempting
to take a flyer for some of these stocks on the dividend, but the
main pattern seems to be that commodity companies have either
slashed dividends to shore up their balanced sheets, or are
seriously contemplating doing so (even the 'safe' ones, such as big
integrated oil co's.)
Probably best to hunker down for a while and hold the strongest
names.
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Author:
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Jam
ok
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Subject:
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Off Topic
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Sentiment:
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Neutral
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Date:
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09/28/15 at 12:23 PM CDT
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