CREE came out with Q1 earnings yesterday after the bell, and the stock is getting killed on the market’s disappointment.
CREE delivered $.07 when the market was looking for $.11. Naturally, the stock is getting murdered.
If you read my March 5th BLOG, you will note I advised the time to really load up would be between $25.00 and $26.30.
Today’s action has taken us to those levels, and so far I have invested in 1,000 more shares of common stock at $26.35, and 25 $25 May Calls at $2.40.
Here’s the chart:
While I’m sure there will be some backing and filling, I’m not going to worry about where we trade in the very short term. As long as the stock hangs in there in the $25 plus range, I’ll hang in there.
If it falls much below $25, I’ll start thinking of either adding to the position, or taking my losses and moving on.
The chart now has a huge, gaping gap from $30 down to $26, and I’m willing to bet my own hard earned cash that gap will be filled over the next couple of months.
While the numbers were a little troubling, owning this stock is a bet on the future of the LED bulb. I believe in it. I think it will become dominant technology over the next few years.
The market always over reacts emotionally in the short term. That’s one plus. Another- Cramer doesn’t like this stock, which in my mind is a huge plus. My BLOGS of late have been saying there is nothing to be done with CREE. Today, there is something to do.
Comments and questions are welcome.
No more incandescent bulbs in Australia by 2010. Go CREE. I’m thinking if I go down 7% from 26.76, I’m out, as then 21 support is my next in target. My two cents for you and your readers! I’m a swing trader so any reader should consider that when taking an opinion pulse. Thanks!
Editor: This stock will fill that gap. I couldn’t trade it on such a tight stop as it is too volatile. A little publicity on LED bulbs and the stock will start moving up again. This is the third time we have seen this kind of opportunity since I started following this one.
Is it time to look at the QQQ’s again?
Editor: I should have suggested a short position in the QQQQs when the VIX was close to 20 earlier this week. Right now, there is nothing to do. I’m watching. Let’s wait for a really oversold or overbought situation and do a high probability trade.
Oh well. Sometimes I break my own rules on a gut feeling. I bailed on 2000 CREE at 25.95. Thought I’d post it here. If this is too much for your blog, let me know and I’ll refrain. I figured with so many curious about trading, I’d post some of my trades to put my money where my mouth is.
Do you see 21 support IF we decline from these levels? Thank you, Sir.
Editor: You are simply look at the last low. I don’t know. As I said, I won’t worry about it unless the stock trades much below $25. Please post all your trades. I know I don’t have all the answers, and I want people to read as many points of view as possible. Some people might like your style better than mine.
I’m just hesitating to buy CREE. Some say there is a problem due to a huge inventory. Also there seems to been an unfilled ‘minor’ gap somewhere in the 18-19 range, dating from early may 2007. So, what’s your idea: doe inventories mean a downward pressure on the stock-price and what about the gap in the 18-19 range. I do believe they will in the next few years be undeniable in their technology, howeveer, is it time right now or will this take some time as to get rid of their inventory and will this inventory stille be usefull or in time prove to be unusefull due to being an ‘old’ (outdated) technology ?
Bart
Editor: I am going to cover why I think it is technically a buy in today’s edition.
For what it is worth to the readers, I chickened out on my last CREE trade. Instead of waiting for my own parameters to be met…down 5-7%…I bailed when the stock nosedived at the open with a slightly up overall market. That was a gut call, as I called it, but it was, as of right now, the WRONG thing to do. So, now I will not buy that stock until a day where it sells off, and even then, I have to buy according to technical entry levels (my opinion, of course). I could compound my error by chasing the stock. You are right, Larry, this stock WILL fill that upside gap.
Who do you consider to be the biggest competitors to CREE?
Editor: There are a couple of big competitors on the high end and the low end. Will get the names shortly, and provide. I believe the stock is going back to $30. I’m up, albeit slightly, on both my recent common purchase and options today.
Here’s your answer: On the low end, there are several Taiwan based manufacturers focusing on mobile applications. Phillips and Nichia compete on the high end of the lighting world. However, I have read the CREE technology is 35% to 50% more efficient above competitors.
23.50. You had said you would add or give up much below 25. I picked up some at 24.50. don’t know whether to double up or take the loss if you are correct about a big market correction. I’m in the QID so thanks for that. Any advice?
Editor: Did a BLOG on this issue already.You’ll find it on the home page. I said at $24 or less, I would re evaluate. Yesterday, I decided to hang in there for the next bump up due to the low nature of the volume on the pullback, but on the next surge to a decent level I will probably abandon this idea.