Wow, reading through the various reports on Cisco this morning, I have never seen so many rats run away from the recommendations. One analyst called the report a disaster and another said the party is over. This all following a report where they beat by a penny and beat on what I thought was the revenue guidance (but missed on the whisper which has capsized the stock). Market sentiment is just so poor at the moment that the action in CSCO (dn 8%) is not a surprise. Following the conference call where Cisco's Chambers used the word uncertain to color the future, the SPUs slammed lower dn 10 quick one's to the 1075 level, after closing 3 pts below fair value to start with. In summary, market sentiment stinks!
However, when sentiment is so poor, values begin to materialize which is why I added to CSCO this morning. I also bought a few other names that were being drilled only because they were tech. The movement in the SPUs since yesterdays morning open at 1100 has been about steep dives and slow rises. Of late, the latter has won the battles which has led to strong closes in the contract. Since I believe this is an overreaction combined with my bias within the trade now swinging to the long side, I think that this overreaction by the bears to CSCOs numbers will lead to them covering en masse. 1090 is the level I am watching though 1100 is more important.
One more thing before closing - yesterday, my bearish cabal (those of my fellow traders who were bearish) were adamant that the October collapse was now setting up. Since I don't believe we follow such a path, I debated them on it. Not one said we would have a rally into year end so I was on my back foot in every conversation or IM.
Bottomline is simple: everyone is way to bearish for this move down to materialize. Froth on some level is needed regardless of what the machines do. Thus, I am looking long.
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