01/04 Kelly Letter Topics
Weekly market review
Seasonal rally
Abysmal manufacturing
Horrific housing starts
Crumbling consumer conf
Rising oil price
Obama's cabinet
Is the Fed a failure?
Platinum 5-star stocks
Market forecast on track
Oil price trends
When to short Treasuries
Stocks are down. My old standby, Sun Microsystems, has been wandering among prices below $4. I mentioned in February when I suggested selling at prices between $5.50 and $5.85 that my goal was to buy back in somewhere below $4.
So here we are and I must be buying, right? Not yet. I've noticed since I started swing-trading Sun about two years ago that the low and high points of its swing range are gradually rising. My experience started with Sun at about $2.50 in September 2002. Then it rose to $4.25. Then it settled to $3. Then it rose to $5.50. Then it settled to $3.25. Then it rose to $5.90. Now it's back at $3.86. You can see the action on this two-year chart.
From that general improvement, I think it's wise to set the new buying trigger at $3.75 and below. I'd love to get more shares at around $3.50 and there's a small chance that the summer doldrums -- what with high gas prices, increasing terror danger, and rising interest rates on the way -- could knock Sun back down below $3.25. I'd keep buying all the way down. I expect Sun to finally get above $6 on the next up cycle, perhaps from September to December.
About that time frame I really have no idea, though. What I do have an idea about is the value that Sun represents at prices below $3.75. It has a good franchise, tech spending is picking up, and Sun's offerings are more diverse than they've been in the past.
As always, I'll let you know when I buy and at what prices. You can either check this space from time to time, or enter your email into the field at the top of this page to get my free financial planning newsletter.
