Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Is it significant that it dropped below the 200 DMA? Perhaps a better price below $10 is worth waiting for. Pick your entry points wisely.

Of course we may miss some this way.
Print the post Back To Top
No. of Recommendations: 6
ak4cea,

You can view a stock dropping through its 200-day moving average as a "noodle point:" a time to reflect upon what the problem is with the company. Because there obviously is a problem, it's up to us investors to figure out exactly what it is and whether we can live with it.

Tenet Healthcare (THC), for example, currently trades at about $10.80. It crossed its 200-dma back in September, 2002, when it was trading at a far healthier $45 a share. When it crossed the line, an investor might have realized there were bigger troubles ahead and gotten out.

It is a significantly bearish signal, but one that shouldn't be considered a hard-and-fast "must sell now!" rule. It's a time to re-examine the fundamentals and decide whether there are "problems" you can live with. You may also decide that it is a good time to get out while you decide what is going on.

I'll also note that the 200-dma is the only TA signal that the Fool will even nod its jester cap at. Again, not a must-sell point, but rather one to cause you to dig deeper.

Rich
Print the post Back To Top
No. of Recommendations: 1
I'm not really surprised that CNXS has been shaken. The revised earnings downward and ~8% growth in sales expected for f2003 is not too pretty. It's about the performance I'd want from a stock trading with a PE of 10-12. Not the current 17X. If CNXS gets into the $7-9 range, I'll give it a serious look. Even then, it's hard for me to consider putting money into a company that doesn't seem to be able to really manage it's growth successfully (This isn't a conviction - I haven't done enough research yet - it's just an impression).

At the same time, I see a potential buying points for FARO, SCNYB, TALK, and ESPD, CSTR, and RADN opening up. Every one of these seems more interesting to me than CNXS.
Print the post Back To Top