I am very disappointed in this past two day’s move in CREE- why? I mean, after all, the stock is up 9 points, or 36% since I first published the idea back in the August 25th edition. I’m disappointed because I only own 1,000 shares. I wanted to own more.
Let’s start with a look at the chart:
As you can see, the stock has been on a tear of late. It’s charged up the charts about 5 points in the last two trading days on big volume. I felt like $30 had been fairly big resistance for the stock, so the breakout is very good news for longs.
It’s time to remind you of one of my tried and true trading rules- when stocks make big spiky runs, what do we do? We sell if anything, and we certainly don’t buy.
For all I know, this stock might just continue climbing 5 points per day. However, I feel like it’s a high risk entry point at this time, and I would avoid establishing new positions or adding to existing ones.
There are rumors of a GE buyout swirling around the company, and with the Bernanke put in place this week, the shorts are no doubt scrambling to cover. Short covering is primarily what causes big spiky rises in stocks- not new buyers. They go up like this when investors are forced to buy.
My target remains $50 in 2008, but I’d rather wait for a nice retracement and accumulate. The market deserves to cool off for a few days before making its next leg up. It’s been a hell of a good week.
This company still has the best LED lighting technology, and it’s going to replace the incandescent light bulb eventually. The GE rumor might just be for real.
Comments and questions are welcome.
Where do you believe would be a good entry point for CREE? I have been watching and have not seen a dramatic pullback since the upswing.
Thanks.
Editor: Good question- will have a look at the chart and publish an update later this week.
Cree to Be in New American Stock Exchange Patent Index
LIGHTimes Staff
October 2, 2007…The American Stock Exchange has selected Cree to be among 300 companies listed in its new index called the Ocean Tomo 300 Patent Index. The index is based upon the value of corporate intellectual property. The American Stock exchange has not launched another broad-based market equity index in about 35 years since the NASDAQ was launched in 1971. To give our readers an idea of how rare a new index is divised, first the Dow Jones Industrial Average was published in 1896. Then, the Standard and Poor’s 500 began in 1957, before the NASDAQ Composite Index came on the scene.
According to an American Stock Exchange news release, the Index represents “a diversified portfolio of 300 companies that own the most valuable patents relative to their book value.” American Stock Exchange News Release.
The index was developed by Ocean Tomo, an intellectual property merchant bank that offers diversified intellectual property-related services. James E. Malackowski, president and CEO of Ocean Tomo said, “t will be a valuable resource for fund analysts, financial advisors and investors, as the Ocean Tomo 300 Patent Index would have outperformed the S&P 500 by an average of 300 basis points per annum between September 1996 and September 2006.” Cree News Release
http://www.cree.com/investor/patent_index.htm
Editor: Thanks for the contribution.