Editor's Note: Richard Suttmeier is a columnist for TheStreet.com whose Tech Trading Diary appears every Tuesday on TheStreet.com. He is also the author of TheStreet.com Technology Report newsletter.
Is Google oversold?
I have been profiling
in the Tuesday Tech Trading Diary each week, and so far I have been reasonably accurate in measuring the stock's risk/reward. The daily chart ended Tuesday positive, but the weekly chart profile is overbought. Look for a trading range now between $287 and $317.80. Stay tuned for an update on Tuesday.
? -- Pat
When I originally looked at this question early last week, CREE was only 2.3% undervalued, which put fair value at $30.46. The weekly chart profile was positive. I found that if you were trading CREE, the best bet would be buying at the quarterly value level at $29.41 to sell at the quarterly risky level at $33.00. (A risky level is a price at which investors are likely to reduce holdings, according to my models.)
Since then, CREE is trading below $29.41, but above its five-week modified moving average at $27.53, keeping the weekly chart profile positive. If an investor was long CREE, he may have added to the position at $29.41.
When I looked at ERES early last week, it was 25.2% overvalued, which put fair value at $11.98. For some reason, the stock was not drawing for me when I looked at it originally. Shares were trading at my weekly pivot at $15.00, and my strategy was to sell strength to the weekly risky level at $16.25.
Updating the pick, the chart drew at the end of the week showing a positive but overbought weekly chart profile. However, an investor did not get the chance to reduce a position on strength to $16.25. Shares declined below the weekly pivot at $15.00, which is a warning. A weekly close below the five-week modified moving average at $13.87 shifts the weekly chart profile to negative.
What to do with Symbol Technology ( SBL)
? -- Robert
SBL has become 20% undervalued. I show a monthly value level at $9.41 and a semiannual value level at $8.18. (A value level is a price at which my models project that buyers will emerge.) Given the constant disappointments from this company, I'd wait for $8.18 before adding to longs.
Given Imaging (GIVN) seems to be making a comeback from what has been a brutal decline for a stock with decent fundamentals. I hold a position at a cost of $25. Your thoughts on the outlook of this stock and best possible strategy would be greatly appreciated.
I like the profile for Given, which makes diagnostic products for disorders of the gastrointestinal tract. The stock is 36.7% undervalued, and the weekly chart profile shifts to positive with a close this Friday above its five-week modified moving average at $23.16. My monthly value level at which to buy on weakness is $21.88. If GIVN has a weekly close above my monthly risky level at $25.51, there is a potential long-term rally to my quarterly risky level at $43.22.
? -- Mike
VSH is 18.4% undervalued with a positive weekly chart profile. My quarterly pivot is $13.33 with my annual risky level at $16.41. JBL is 8.3% undervalued with an overbought weekly chart profile. My monthly pivot is $30.62 with a weekly risky level at $32.05. FLEX is 14.7% undervalued with a negative weekly chart profile on a close this week below the five-week modified moving average at $13.34. My monthly value level is $12.25 with a quarterly risky level at $13.91.
Komag( KOMG) is increasing production more than 15% to meet predicted growing demand. Can your model predict, at the end of its production expansion, what its future fair value would be?
The answer is yes only if Wall Street analysts raise their 12-month forward EPS estimates, because higher estimates pull up the stock's fair value. The 2005 estimates average is $3.31, while the 2006 estimate average is as high as $3.85, so fair value jumps to $30.28 from $27.68. With the stock above $37, watch the charts like a hawk. The five-week modified moving average -- at $32.33 and rising each week -- will be important support on any pullback.
Right now the positives you refer to are not in my model, as KOMG -- a maker of thin-film media or disks that are incorporated into disk drives to record, store, retrieve and protect digital information -- is 36.2% overvalued. The weekly chart profile is positive but overbought, so the stock's momentum is assuming a positive development. KOMG offers an example of buying off the technicals, not the fundamentals.
TXN is 11.9% undervalued with an overbought weekly chart profile. TXN was in TheStreet.com Technology Report model portfolio, but removed for a 40% gain recently.
. -- Shawn
AMCC, VTSS and CNXT are still extremely undervalued, which is true for most former highfliers that are now trading at "option prices" (when an investor buys a stock trading below $5, I say that they are essentially buying an option that the company will survive). Keep in mind that just because they are below fair value is not a signal to buy. These three look like reasonable speculations, but I would like to have a basket of 10. The odds for one making it back to its glory days could offset losing your capital on the other nine.
? -- Rick
INTC, a member of
portfolio, is 18.9% undervalued, but the weekly chart profile is now neutral. NOK is only 9.1% undervalued with a negative weekly chart profile.
STX is 15.3% undervalued with a weekly chart profile that shifts to negative on a weekly close below the five-week modified moving average at $18.81. A weekly close below my quarterly pivot at $18.37 would be a bigger warning. The upside appears limited with a monthly risky level at $20.26. Readers of TheStreet.com Technology Report will know that I prefer
in this group.
Richard Suttmeier is president of Global Market Consultants, Ltd., chief market strategist for Joseph Stevens & Co., a full service brokerage firm located in Lower Manhattan, and the author of
newsletter. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time. Early in his career, Suttmeier became the first U.S. Treasury Bond Trader at Bache. He later began the government bond division at L. F. Rothschild. Suttmeier went on to form Global Market Consultants as an independent third-party research provider, producing reports covering the technicals of the U.S. capital markets. He also has been U.S. Treasury Strategist for Smith Barney and chief financial strategist for William R. Hough. Suttmeier holds a bachelor's degree from the Georgia Institute of Technology and a master's degree from Polytechnic University. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback --
to send him an email.