CREE has fallen below my SSL of $24, so it’s now worth taking a look at and planning a strategy.
Despite having a bleak technical picture right now, I am not going to sell the stock and take my loss quite yet.
This particular stock has a history of being pretty volatile- both to the upside and the downside.
It also tends to make multiple point moves once it gets headed in one direction or another.
The stock headed down in fairly nasty fashion today, but I’ve decided to tough it out.
Here’s why:
The stock is now trading at its lowest level since early January. However, the volume involved in this week’s sell down is far from extraordinary.
The stock’s average daily volume as measured over the last 150 days is about 2 million shares per day. This past week the stock did not trade more than 2 million shares on any one day until today. It was trading more like 1/2 its normal volume, which isn’t much of a sell off as measured by volume.
Today the volume was about 25% above normal. Therefore, this could be the big blow off day of what is really not much of a blow off from a volume perspective.
I am going to wait and keep my fingers crossed for some kind of rebound in the not too distant future.
However, longer term, I am rapidly losing interest in CREE. Last quarter numbers were well below Wall Street expectations, and this stock is simply not participating in the alternative energy movement.
I am a big believer in the future of LED bulbs as a major component in energy saving, but CREE might not be the one. The market certainly is not enamored of this management team.
When some International publicity hits on the future of LED bulbs, this stock will trade back up, and that will be the time to get out.
Until then, I’m going to hang in there.
Comments and questions are welcome.
I have to say, I dont agree with you on this one. Of course that all depends on where you got in, but I like this stock and have for awhile.
Although I agree the management team could be better, they have a solid product and the 50% swing from around 24 back up to 36 or so seems to be a recurring theme. I like recurring bounces like this. Maybe Im all wet but it seems that if you buy below 24 the 50% profit happens within a few months.
Editor: I don’t think we’re in disagreement. When the market looks at their actual numbers, the stock sells off. When there’s a lot of publicity out there on LED lighting and the movement to energy saving green technologies, the stock trades up. Therefore, I think when it trades up on hype, you have to sell. When it trades down on numbers, you buy. Eventually, they will either start delivering the numbers Wall Street expects or exceeding them, or fall by the way side. Right now, next time it gets near $30, I’ll be getting out looking to get back in on June numbers.
Im so glad you introduced me to this stock back in late August. imo i think your absolutly correct” trades up on hype, you have to sell. When it trades down on numbers, you buy. ”
LED and more efficient lighting are the future, plan and simple
this is a great stock for a 20year old trader for my roth ira account, of course buying on dips.
long term*
Editor: Definitely the way to look at this one. It would be nice if the stock were powering higher on great numbers, but unfortunately that’s not case. Therefore, we change our strategy accordingly.