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Thoughts on the Tape: Sun Microsystems, Qualcomm, Apple


Find the catalysts, make the trades and use good risk management (both on the long and short side).

  • Is Sun Microsystems (SUNW) now selling too cheap again? I'm back long this name today and hope I'm early.

  • Is Qualcomm (QCOM) selling too rich?

  • Why is small-cap tech Tollgrade (TLGD) flying today?

  • There's a big bounce in Apple (AAPL) today. I'm using the large premium and writing calls on remaining position.

  • If more quant funds liquidate, will they be a net seller of stocks or a net buyer of stocks?

  • Nasdaq (NDAQ) is far and away the cheapest valued exchange: is it valued correctly?

  • Many stocks today are just changing places, i.e., what was weak last Thursday/Friday is strong today and vice versa.

  • EMC (EMC) is finally acting like it should ahead of the VMware deal. I think VMware can trade into the high $30s or low $40s and not be too richly valued. I did some valuation work on them and will post if time permits.

Lastly, the endless talk of corrections and having an exact 10% sell-off or more is mind-numbing. How about the fact that we have sold off in the range of 7-9% on the Dow, S&P and Naz one to two times per year for the last three to four years?

During that time earnings growth has been unprecedented. I think we are now approaching either the 16th or 17th consecutive quarter of 10% EPS growth on the S&P. Has that ever happened before? Also, the Naz corrected more than 10% in last year's summer sell-off. In fact the Naz has corrected roughly 18%, 14% and 14% during 2004, 2005 & 2006 respectively. Are those not all considered "official" corrections? If it doesn't happen to the S&P or Dow it doesn't count?

The bottom line: Find the catalysts, make the trades and use good risk management (both on the long and short side). The market is not going to ring the "all buy or all sell" bell.

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Positions in SUNW, AAPL, and EMC.

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