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SNDK - good short or long candidate?


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#1 greenie

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Posted 27 January 2007 - 07:14 PM

Broke below 2 year long trend line and backtested. Earning coming in 2 days. Any comment?
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#2 hiker

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Posted 27 January 2007 - 07:41 PM

what is your trade time frame...you want to play it for the few days prior to the release...or hold it through?

for the usefulness of what appears on the surface to be an ugly chart, loaded with short interest...ck out the stocks and note where price was on the dates when posted -

http://www.traders-t...showtopic=60793

http://www.traders-t...showtopic=63431

you and I both know it is a guess what SNDK will do from here...and more of a guess if you are thinking of holding it only for market timing or short-term trading purposes.

what do you think the odds are it will make an advance vs. a decline off the horizontal price move of recent weeks?

what are you going to do?

btw, Legg Mason or Rich Freeman are not exactly known for being poor stock pickers -

http://webreprints.d...5971150220.html

Edited by hiker, 27 January 2007 - 07:48 PM.


#3 hiker

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Posted 27 January 2007 - 08:10 PM

similarly a trader could have easily found reasons in the chart of GROW and LFC not to attempt a long entry on the recent lows.... MSTR dip I posted here in April '05 looked like an ugly entry to most chart readers that responded at this FF board when I provided the real-time heads up. just some examples...how do you read charts? entries are a probability decision...it is a call a trader makes based on all the data...not on believing that one is capable of predicting the future. so what is the downside risk for SNDK...that it will fill the gap below is minimum risk....upside reward has no limit in reality...minimum upside is not relevant if a trader is gunning for something not presently known. LFC on the breakout in 2005/2006 above the prior high...who could have predicted how far it would have run....the .80 cent stop I took on the entry prior to the breakout was rewarded by a measure I never could have predicted. greenie...you seem to have all sorts of certainty in your reasoning that makes you stay short the Q's...I do not believe such certainty exists. I think it is a mistake to have such beliefs when trading. It is all a guess about probabilties.

Edited by hiker, 27 January 2007 - 08:15 PM.


#4 greenie

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Posted 27 January 2007 - 08:19 PM

Hi Hiker, The timeframe would be 3-4 months. I was looking at few things - (i) It has been lagging SPX, NDX and even SOX in the last few months. In the strong market rally from June/July, it hardly made any gain. (ii) It broke below the upward trendline from July 2005, retested recently and violently rejected. Also, if you look at the bounces from the trendline in each rally, they were progressively lower. (iii) Fundamentally, the company is in the Flash memory business, where inventory has been piling up everywhere (check intel report for example). It is not like 2003-05, when digital camera was new and everyone needed more memory. Also, now there is more competition. I do not know, whether all such bad news have been priced in already. Combining the above three, I am expecting it will have higher probability of going down than up. You make some interesting points, especially the one about the value funds. I am puzzled, because the company is priced 3 times revenue and in what may be called a commodity business. I will stay on the sideline and watch for now.
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#5 hiker

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Posted 27 January 2007 - 08:21 PM

what on the chart would have prompted you to buy DECK in October 2005? risk/reward? and money management when making the trade?

#6 A-ha

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Posted 27 January 2007 - 08:25 PM

I have a trade coming for sandisk :lol:

#7 greenie

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Posted 27 January 2007 - 08:29 PM

greenie...you seem to have all sorts of certainty in your reasoning that makes you stay short the Q's...I do not believe such certainty exists.

I think it is a mistake to have such beliefs when trading.

It is all a guess about probabilties.



Hi hiker,

Thanks for your wise advice. I understand what you are saying, but it is sometimes harder to change one's mind than to think I can. Will keep working on my trades.

Best,
Greenie
It is not the doing that is difficult, but the knowing


It's the illiquidity, stupid !

#8 greenie

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Posted 27 January 2007 - 09:10 PM

what on the chart would have prompted you to buy DECK in October 2005? risk/reward? and money management when making the trade?


DECK (see chart):

buy in Oct after weekly Doji, with reward=retest of downtrend line, risk=Oct low.
Fundamentally, it was selling close to revenue. Not a time to be on the short side.

increase position size 4-5X after breakout in Dec, with a stop just below the downtrend-line. Risk=0, because the gain from small position in Oct is working for you.

increase position in July 2006, on its relative strength over $RUT and the new market rally.


Posted Image


SNDK:

Short on retest and failure of uptrend line in Jan. Stop - Jan high. Small position.

Increase position size 4X, if it breaks below July low, with a stop just above July low.

Posted Image

Posted ImagePosted Image
It is not the doing that is difficult, but the knowing


It's the illiquidity, stupid !

#9 hiker

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Posted 28 January 2007 - 09:49 AM

greenie... good work. so, you would only go short SNDK. no possibility being considered to go long even at $30-38 for a multi-year long? what about a move above 48 or so? You consider it easier to manage the stops on a long entry near 48 than a long entry nowadays 40-42 consider DECK example on how easy it was to manage stops when entered long 18-22, and ride it all the way up...I exited a some specific points in that run, in order to manage money and reenter. we all have our own methods with SNDK, the short side has been favored for a long time...it is in no man's land right now...what is most likely to occur with price during the next 18 mos. may not be read in the chart, tho' the current price channels all say down. I put very small $ into trades like this until something more is resolved. I am holding my small long position through earnings. btw, when I gun for the Q's long again...I will be looking at the possibility of 60's...I am not trading a position there with a short view of 47.50 only. when I was privately and publicly suggesting to my friends to buy KKD when it was trading in the $5's....I heard back asking whether I expected the long trade to have a problem with $6.20's resistance...that alone kept folks from entering when stop management would have been the most efficientl.

Edited by hiker, 28 January 2007 - 09:54 AM.


#10 SemiBizz

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Posted 28 January 2007 - 07:41 PM

http://bigcharts.mar...&mocktick=1.gif



This one looks like BRCM did in May. You may recall my post regarding the fact the BRCM had weakness zone in roughly the same price range as this one 35-38... namely that there was no base built in the price range. As you can see SNDK is also hanging around that gap from 7/24. Looks to me like it gets filled. And then depending on how strong the volume is for that move whether or not that weak area from 35-38 gets tested. Considering semiconductor fundamentals are weak as well as weakening consumer demand, either the chips are going to come back as a group and take SNDK back up or they are going lower and SNDK is going to fall under 35 and head for the lower gap.
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