November 2, 2007
Crocs Cracks
A lot of recent buyers find themselves now trapped underwater in CROX, creating what is known as “overhead resistance.”
Cat: | Time: 8:49 am (utc+8)
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November 2nd, 2007 at 3:09 pm
CM, just wondering… are you going to average down your huge position on WM after a sell off on financial stocks today? I also have huge position on C (avg price: $41) and WM (avg price: $27.8).
November 2nd, 2007 at 4:05 pm
crz: No, I can only take so much pain. I’m getting killed and looking stupid, but what else is new. I wouldn’t say WM is a *huge* position, just bigger than it should be.
November 2nd, 2007 at 8:35 pm
CM said:
“I wouldn’t say WM is a *huge* position, just bigger than it should be.”
My personal experience has been that position sizes tend to be either ‘too big’ or ‘too small’ depending on how they’re performing.
I think investors should assume that these financials like C, WM, BAC, etc. may cut their dividends by half (and in some cases, even more) before the payouts in the 4th quarter.
November 2nd, 2007 at 8:46 pm
Todd: We’ll see… if they cut dividends that throws everything into disarray — they’ll do it only as an absolute last-ditch thing. You’re right, if WM were in the 50s now I’d have far too small a position. ;-)
November 2nd, 2007 at 9:07 pm
CM,
How can they NOT cut dividends ? Some of these companies are paying out more than they’re earning. That simply is not sustainable.
I think the stocks are currently going under re-pricing/revaluations based on my assumption.
That said, if you use Bill Cara’s method of looking to buy good companies when their RS-7 on the daily, weekly, and monthly charts is below 30, then WM is there.
Cramer has come out repeatedly and said that there’s a good chance that WM won’t make it. So the question is, is WM a ‘quality company’ that has the ability to get through this rough spot ? It’s largely in the hands of management at this point, IMO.
November 2nd, 2007 at 9:42 pm
Peter Lynch wrote in one of his books, the time to buy is when they cut the dividend. He was talking about utilities, but I think the principle applies to the financials too.
November 2nd, 2007 at 10:15 pm
Holy burritos !
WM down BIG right from the start of trading today, currently below $24.
Is The Chairman unloading ???
November 2nd, 2007 at 10:40 pm
I still think it’s too early to get into the financials unless you are trading it. Daily and weekly charts both look terrible.
November 3rd, 2007 at 2:44 am
I would disagree that most people are underwater. I would think that smart money would have closed out their positions after the Exhaustion Gap, which created the Island Top. You add that CROX was about to announce their quarterly earnings which was another tell to get out. It would have taken some huge balls to short CROX after it’s run, but I think most Hedge Funds learned their lessons when they shorted under the $30 range.
November 3rd, 2007 at 4:41 am
KC,
I agree with CM that most recent buyers are in fact underwater in CROX. If the big elephants were selling, it would have been reflected in the price. But CROX was trading at its all time high — a day before the big gap down. I wouldn’t be surprised that a number of those trapped are institutions and hedge funds.