-- Posted Friday, 26 October 2007 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Friday, October 26, 2007
“Phenomenally accurate forecasts”
The Nasdaq index has been slithering sideways for nearly two weeks, so you might as well flip a coin if you’re keen on betting which way stocks are finally going to break, up or down. And forget about forming any strong opinions before the close, since that’s unlikely to produce better results than a coin-toss.
We were forming a bearish opinion ourselves as Thursday’s session drew to a close. Fortunately, a telephone distraction prevented our buying a bunch of QQQQ puts just before the bell. They’d have been goners moments later, when Microsoft announced a 23% jump in profits, supposedly on strong demand for Windows and Office software.
The news caused the QQQQs, of which Microsoft is a key component, to leap exuberantly in after-hours trading, recouping in mere seconds all of the 67 cents they’d lost during the regular session. Had we bought the puts, they’d have shed 20% of their value before the trade was even confirmed -- just like a new car does when one drives it off the lot. That’s what so challenging and stressful about trading: All too often, one gets to experience heart-stopping buyer’s remorse mere seconds after a purchase or short sale.
Vista or Rat Poison: Choose!
Concerning Microsoft’s apparent earning’s triumph, there was some skepticism in the Rick’s Picks chat room about its veracity. That the jump in revenues was attributed in part to hot sales of the Vista operating system seems curious, given that Vista is the most reviled and resisted mediocrity the company has ever shoved down PC users’ throats.
We should also mention that MSFT’s fabulously successful Halo3 video game seems to be taking a heavy toll on the Xbox hardware. My son had to ship his unit back to the company for a warranty replacement after it quit in the heat of Halo-mania. The UPS guy who came to pick it up knew exactly what it was, since similar pick-ups in the neighborhood had been keeping him busy for weeks.
Putting the facts aside, as we often must to succeed as traders, a chat room denizen gets the day’s final word on Microsoft: “They got their numbers, and that’s all the Street wanted.” Sure enough.
Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2007, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Friday, 26 October 2007 | Digg This Article | Source: GoldSeek.com
