Day: October 12, 2005

Distribution Days Piling Up

Nasdaq_101105 Today (10/11/05 on the chart) was the Nasdaq’s fourth distribution day in the past four weeks.  Also you notice the close below the 200-day EMA and below last week’s intra-day low.  Generally not a positive development, although six red candles in a row is a pretty good run and at least a bounce could be in the offing.  After that we will see.  The public hasn’t seen a capitulation day in a few years and I think I smell one in the air.  Doesn’t mean we’ll get it soon or not, but people do need to be reminded sometimes.  Cheers!

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Microsoft Opportunity?

Msft_101105 Most of you know that I’m more into "below the radar" type growth stocks, but today we’re going to take a quick look at the big boy of the Nasdaq, Microsoft (MSFT).  Today’s action shows the stock making a reversal candle (hammer) on increased and above average volume.  That was enough for me to pick up a small position.  The stock is pretty unloved right now and at a 16x forward P/E and 12.8x EV/EBITDA with a 1.3% dividend yield, its relative valuation is not bad.  Next year the new Windows Vista and Office programs will be released, but of course they will face much greater competition this time (from everyone from Apple to Sun Microsystems / Google and the openoffice.org project to open source developers).  Cheers!